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Scotiabank See 8.0% Terminal Rate For BanRep

COLOMBIA
  • Scotiabank retain their call for BanRep to keep hiking 100 bps over its next two meetings, leading to a terminal rate for this tightening cycle of 8.0%.
  • The split vote shows that increasing inflationary risks have led to a shift in the balance on the Board. Scotiabank affirm their above call on rates; however, the Minutes will be relevant in assessing the balance of opinion ahead of forthcoming meetings.
  • Governor Villar also highlighted that a neutral rate is not the final target in the current hiking cycle and that depending on the inflation measure used (spot, 1-y expectations, or 2-y expectations) the real policy rate could currently be close to neutral, or even contractionary. Either way, Villar said the Board remains data-dependent.
  • Scotiabank’s terminal rate of 8% for this tightening cycle is subject to inflation developments and the staff's updated macroeconomic scenario, which will be released on Monday, May 2. This scenario will be key to assessing possible changes to the terminal rate. The press conference with the staff will be on Wednesday, May 4.
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