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Colombia Policy Interest Rate 11.75% (consensus 11.75%) in Apr-24

• 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.

Colombia CPI Inflation 1.09% m-o-m (consensus 1.0%) in Feb-24

- Colombia's inflation rate in February 2024 surpassed expectations by 0.1pp, reaching 1.09% m-o-m and 7.74% y-o-y.
- This monthly pace is the fastest increase since February 2023, exceeding the one-year average by 0.47pp.

Colombia CPI Inflation 0.92% m-o-m (consensus 0.9%) in Jan-24

- Colombia's Consumer Price Index (CPI) recorded a month-on-month inflation rate of 0.92% in January 2024, marking the highest level of inflation since March 2023, but not surprisingly so.
- The current inflation rate exceeds the one-year average by 0.25 percentage points and is back to the long-run average, indicating a potential resurgence in pricing pressures and the need for careful analysis and policy responses.

Colombia Policy Interest Rate 12.75% (consensus 12.5%) in Jan-24

• The Banco de la República Colombia's cautious 25 basis point interest rate cut to 12.75%, against the consensus expectation of a 50 basis point reduction, reflects a strategy that is responsive to the ongoing decline in inflation, mixed sector-specific inflationary signals and a commitment to gradual monetary easing.
• Economic projections remain steady, with improving external financial conditions and a significant correction in the current account deficit, providing a backdrop for the conservative rate cut despite a stronger peso and reduced sovereign risk.
• The Board's decision-making process emphasizes a vigilant stance toward inflation convergence, mindful of wage policy impacts and global risks, while maintaining a clear orientation towards data-driven policy adjustments.