Economists Split Over Size of Colombia Interest Rate Cut

[ad_1]

(Bloomberg) -- Economists are split over whether Colombia is about to slash interest rates the most since the global financial crisis to revive weak economic growth.

Most Read from Bloomberg

Until now, the central bank has ignored President Gustavo Petro’s calls to speed up monetary easing. Now, a significant minority of analysts think it will finally do what the government wants when the bank’s board meets Monday.

Twenty of 27 analysts surveyed by Bloomberg forecast that the bank will lower its key rate to 10.25%, from 10.75%, the fifth straight half percentage-point reduction. The other seven, including BBVA Colombia SA, Bancolombia SA and UBS Securities LLC predict a reduction of three quarters of a percentage point, which would be the biggest in 15 years.

In recent months, two of the seven board members have voted to lower rates more aggressively, arguing that inflation has been tamed and that the economy needs a boost. But, until now, a majority of policymakers have rejected this case for fear that consumer price rises might not slow to target quickly enough.

Annual inflation has halved to 6.12% from its post-pandemic peak last year, but it’s still more than twice the central bank’s 3% target. Economic activity has also been stronger than expected, expanding 3.7% in July from a year earlier.

Central bank governor Leonardo Villar will announce the decision after 1 p.m. in Bogota.

What Bloomberg Economics Says

“We expect Colombia’s central bank to cut its benchmark rate to 10.25% from 10.75% at its Sept. 30 meeting. That would match 50-basis-point reductions in July, June, April and March and bring total easing to 300 bps since the cycle began in December. It’s likely to be another split decision, with some policymakers voting for a bigger cut. Forward guidance will likely anticipate more reductions, with the magnitude depending on new data.”

— Felipe Hernandez, Latin America economist

Click here for full report

Earlier this month, the case for a faster monetary easing seemed stronger, especially after the Federal Reserve’s half-point interest rate cut. However, the government’s failure to pass its 2025 budget in congress has sparked renewed concern about the nation’s fiscal outlook.

Elsewhere in the region, central banks in Mexico, Chile, and Peru have cut interest rates at recent meetings, while Brazil lifted borrowing costs amid renewed inflationary pressures.

Story continues

--With assistance from Rafael Gayol.

M	T	W	T	F	S	S
	1	2	3	4	5	6
7	8	9	10	11	12	13
14	15	16	17	18	19	20
21	22	23	24	25	26	27
28	29	30

Economists Split Over Size of Colombia Interest Rate Cut

Indigenous Group Asks SEC to Scrutinize Fracking Companies Operating in Argentina

Oasis tour live: Fans steel themselves for huge announcement as band tease ‘warning’ in North America

Oasis tour live: Fans steel themselves for huge announcement as band tease ‘warning’ in North America

Be ready for predictability with our East-West Network in North America – Maersk

Antigua and Barbuda to receive 21,000 doses of Pfizer from US – WICNews.com

Aruba to open borders for Latin America as of December 1 – Curacao Chronicle

What it’s like to stay at America’s only private island resort – The Independent

Two American tourists bitten by shark seconds after jumping in Bahamas water – NBC News

Barbados fishing industry still reeling from hurricane aftermath – BBC

37 dead in Bolivia after 2 buses collide, police say – VOA – Voice of America English News

Bison in Brazil – Howard University Athletics

British Virgin Islands pledges US$400,000 in hurricane aid to St Vincent, Grenada – Jamaica Observer

Is Canada poorer than Alabama? A reality check on economic comparisons – Policy Options

Categories

Archives