Colombia | Banco de la Republica reduced its policy rate by 25 bp to 9.50%

Summary

The Board of Banrep reduced its monetary policy rate by 25 bps, bringing it to 9.50%. This decision was split: 5 members in favor of the 25 bp reduction, one in favor of a 50 bp reduction and one in favor of a 75 bp reduction. This is an important change in the Board's stance, after 6 meetings with rate cuts of 50bp.

Key points

• Key points:
• Banrep's Board statement highlights the reduction in inflation in November, reaching 5.2% (from 5.4% in October) but warns that non-food and non-regulated inflation remains stable with high persistence in services inflation.
• On the activity front, the 2.0% growth in the third quarter and a cumulative growth of 1.6% for the year to date stand out, figures that show a recovery compared to what was observed in 2023. Particularly noteworthy is the performance of gross investment, which grew by more than 20%.
• The main focus of the press release and the press conference was the uncertainty and volatility in the financial markets due, among other issues, to the observed depreciation of the exchange rate and its potential effect on inflation, but also on the economy.
• Another of the most relevant factors in the press release and at the press conference was the fiscal uncertainty that has grown in recent months. On this issue they took advantage of the presence of Minister Guevara to inquire about the fiscal outlook, to which he responded that they are committed to fiscal sustainability and compliance with the rule.

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