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Scotiabank Says May Activity Gives BanRep Room To Deliver 50bp Rate Cut

COLOMBIA
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  • Following yesterday's May economic activity data, Scotiabank believes that BanRep will cut its interest rate by 50bp at its meeting on July 31. The data provide room for the Board to continue with its cautious stance, although the time for an acceleration in the easing pace could be close, if inflation returns to its downward path and if eventually the Board becomes more concerned about low domestic demand.
  • In m/m terms, activity fell by 0.4% m/m in May, vs. +2.0% previously, led by a decline in public sector activities. Scotiabank says that the May data shows that the results of the previous month (when activity rose at its fastest annual pace for 20 months) were the product of more working days for manufacturing production, and the response of agriculture and utilities to the El Niño phenomenon.
  • In their view, economic activity remains weak, showing that the industrial sector and commerce continue to have difficulties recovering, amid a weaker consumer appetite.
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  • Following yesterday's May economic activity data, Scotiabank believes that BanRep will cut its interest rate by 50bp at its meeting on July 31. The data provide room for the Board to continue with its cautious stance, although the time for an acceleration in the easing pace could be close, if inflation returns to its downward path and if eventually the Board becomes more concerned about low domestic demand.
  • In m/m terms, activity fell by 0.4% m/m in May, vs. +2.0% previously, led by a decline in public sector activities. Scotiabank says that the May data shows that the results of the previous month (when activity rose at its fastest annual pace for 20 months) were the product of more working days for manufacturing production, and the response of agriculture and utilities to the El Niño phenomenon.
  • In their view, economic activity remains weak, showing that the industrial sector and commerce continue to have difficulties recovering, amid a weaker consumer appetite.