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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.
Executive Summary:
- Rising inflation and deteriorating current account balance leave BanRep with little choice
- Board run risk of a further contamination of medium-term inflation expectations, which should justify hiking rates
- Consensus split, with a sizeable minority are expecting a slowdown in the hiking pace in September, eyeing a 100bps step to 10.00%
Since the July decision, the USD/COP rate has stabilised materially – a market signal that many on the board may see as justification for a smaller 100bps step this month. Similarly the growth profile for Colombia has deteriorated, with PMI data signalling contraction, Q2 GDP growth coming in below expectations and consumer confidence dropping sharply off the 2022 highs.
Nonetheless, the relentless profile of inflation and sour current account balance data should tilt the majority of the board to opt for a sizeable 150bps hike and retain 2022’s hawkish bias in the post-rate decision press conference. This view is bolstered by the consensus view of a further acceleration for CPI in September, with the Y/Y rate seen climbing to 11.3%, while an improving unemployment rate only adds to the expected tightness of labour markets into year-end.
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.