Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
MNI Colombia Central Bank Preview - September 2023
Executive Summary
- According to all surveyed analysts, BanRep is expected to hold the policy rate steady at 13.25%.
- The latest inflation data was a signal to the market that both headline and core inflation remain at stubbornly high levels and the process of disinflation has been considerably slower than previously envisaged. The committee will likely reinforce its data dependent stance, allowing more progress on inflation before committing to a policy pivot.
- However, given the most recent commentary from Finance Minister Bonilla, markets will focus on any dissenting votes at this meeting and any potential guidance regarding the future outlook for monetary policy.
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MNI Colombia Central Bank Preview - September 2023.pdf
Finance Minister Bonilla Likely To Vote For Cut
Finance Minister Ricardo Bonilla stepped up his support for initiating an easing cycle at his meeting, recently telling reporters that he will argue for a rate cut at the September 29 meeting, even if it “very small”. His primary reasoning for such a view was that inflation is slowing, which he considers more important than the pace at which it is doing so. For reference, this is not particularly new information, having previously commented that he saw rates being adjusted in either September or October. While the minister’s comments are significant given his membership of the BanRep board, he is comfortably considered to be one of the most dovish members, given his recent appointment by President Petro to the position.
The main question remains whether he will be able to sway any other members of the committee this week and judging by comments made by BanRep co-director, Roberto Steiner, this could be a difficult task. Speaking at a banking event in Bogota, Steiner said high rate of inflation and inflation expectations make it imprudent for the central bank to cut interest rates and BanRep need to maintain a contractionary monetary policy until it can guarantee the convergence of inflation to the 2%-4% range. Going further, Steiner stated that Colombia’s positive output gap is showing demand-side pressures on prices and also warned that high increases in the 2024 minimum wage could make it more difficult for inflation to recede.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.