Publications

In July, the Central Bank of Colombia kept the policy rate at 9.25% in a split decision. Although headline inflation eased slightly and economic activity showed more momentum, the Board highlighted the stability of core inflation and inflation expectations, as well as strong domestic demand, justifying a restrictive stance.

The Board of Banrep reduced the monetary policy rate by 25bp to 9.25% in April. This decision was unanimous. On this occasion, they highlighted that inflation and inflation expectations derived from the debt markets declined.

The Board of the Banco de la República kept the policy rate unchanged at 9.5% in a split decision (4 to 3). The decision was based on inflationary and fiscal risks, as well as external uncertainty.

Diverging monetary policy between China and the US remains after Trump’s victory, leading to a longer time China-US policy rate reversion.

Banxico looked past the jump in headline inflation, rightly so in our view, with core inflation easing and cut the policy rate by 25bp to 10.75%, as we anticipated. It anticipates that lower inflation pressures may allow further rate cuts going forward.

The indebtedness of the private sector remains below that of peer countries, though signs of deterioration in NPL ratios started to be seen. Banks’ FC liquid assets are solid enough to cover their ST external debt. FC credit evolution and swap policies of the CBRT will be decisive for banks’ FC liquidity.

The indebtedness of different agents remains below that of peers. The composition of external debt has been shifting among the borrowers since 2018. There is the increasing trend led by public, compared to the ongoing decline in the private sector.

Credit growth accelerated on the week ending by March 1 due to commercial credits of both public and private banks. Total credits’ 13-week annualized trend rose from 27.7% to 29.4%.