Heteronomics Archive

December 20, 2024

Colombia: 25bp Rate Cut To 9.5% (Consensus 9.25%) in Dec-24

Banco de la República reduced the benchmark rate by 25bps to 9.50%, undershooting market expectations of a 50bp cut due to concerns over persistent inflation and exchange rate volatility.
While headline inflation fell to 5.2% in November, stable core inflation and peso depreciation constrain BanRep’s scope for faster rate cuts, as imported inflation risks remain significant.
Robust Q3 GDP growth and a resilient labour market support gradual monetary easing; however, heightened external financial pressures and fiscal uncertainties will heavily influence future policy decisions.

October 31, 2024

Banco de la República reduced its policy rate by 50bps to 9.75%, continuing its easing cycle, although three members preferred a more aggressive 75bps cut.
Inflation has moderated to 5.8%, yet core inflation at 5.5% and a weakening peso signal caution in future rate cuts, as imported inflation risks could limit BanRep’s flexibility.
Colombia’s upwardly revised growth projections contrast fiscal and exchange rate pressures, which BanRep indicates will be critical in assessing the pace of additional easing.

September 30, 2024

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.