Heteronomics Archive

September 30, 2024

Colombia: 50bp Rate Cut To 10.25% in Sep-24

BanRep reduced its policy rate by 50bps to 10.25%, driven by lower-than-expected inflation figures, though internal divergence saw some board members push for a 75bps cut.
Declining inflation, particularly in food and regulated items, coupled with moderate GDP growth, supports a gradual easing cycle; however, inflation expectations for 2025 remain stable.
Rising risk premiums due to a weaker fiscal position and falling oil prices present external risks, likely influencing BanRep’s cautious approach to further rate cuts.

July 31, 2024

The Banco de la República’s decision to cut the benchmark rate by 50 basis points to 10.75% reflects ongoing efforts to stimulate economic growth amid a complex inflationary environment, where core inflation shows slight improvement. In contrast, food inflation rises due to climatic impacts.
Economic recovery is expected to continue, with GDP growth projected at 1.8% for 2024, supported by less restrictive external financing conditions due to looser monetary policies from major global central banks.
The central bank maintains a cautious yet flexible monetary policy stance, emphasizing that future rate adjustments will be contingent on incoming economic data and global financial conditions, ensuring a responsive approach to dynamic market realities.

June 28, 2024

The Banco de la República Colombia cut its policy interest rate by 50 basis points to 11.25%, aligning with the economic consensus. It reflects a cautious approach to stimulating growth amid mixed inflation signals and elevated food prices.
Stronger-than-expected GDP growth of 0.9% in Q1 indicates a recovery path. Yet, inflation expectations remain elevated, with public debt market forecasts suggesting inflation will stay above target until the end of 2025.
Restrictive international financial conditions have increased the country’s risk premium and depreciated the peso, raising inflationary pressures.

April 30, 2024

The Banco de la República Colombia’s unsurprising decision to reduce the policy interest rate by 50 basis points to 11.75% aims to bolster economic growth against a backdrop of declining inflation, with the central bank maintaining a careful balance to avoid overheating the economy.
Updated economic projections suggest a recovery, albeit juxtaposed with a concerning uptick in unemployment rates, presenting a challenge for ongoing monetary policy adjustments.
External economic pressures, particularly from US policy shifts and global financial market trends, remain pivotal in shaping the future trajectory of Colombia’s monetary policy, emphasizing the importance of adaptive strategies to navigate international uncertainties.