Sell-Side BanRep Policy Rate Forecasts

Analysts BanRep comments:

• JPMorgan noted inflation expectations are likely to move higher, and they now see BanRep moving more forcefully to manage risks. Their revised call is for BanRep to kick-off the already telegraphed tightening cycle with a 50bp September hike, before settling into a 25bp per meeting pace thereafter. They concede this is a close call, as up to now the board has sought a more gradual approach.
  • JPM see a 3% policy rate by January, a pause through the election cycle, and then the policy rate reaching a close-to-neutral 4.25% by end-'22.
• Goldman Sachs expect Banco de la Republica to raise its policy rate to at least 2.5% by the end of the year, from 1.75% currently.
  • Chief Latin America economist noted, "Overall, monetary policy is way too accommodative in almost every country for the intensity of the inflation pressures, and the V-shaped recovery as the virus risk recedes," adding that "If Colombia does not start to lift rates they may well find themselves behind the curve."