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Three developments shaped the Treasury market over the past month: a weak jobs report, a dovish tone from Powell at Jackson Hole, and renewed political pressure stemming from Trump’s push to replace Governor Lisa Cook from the Fed’s Board.

The sensitivity on growth and employment might continue to shape the policy mix with a trade-off of a slower disinflation path. We expect the Medium Term Program (MTP), to be revised in early September, to have more color on the political preferences on near term growth outlook.

In its August meeting, the Central Bank's Board of Directors held its benchmark interest rate at 4.50%. In real terms, the rate stood at 2.31% , a level consistent with a neutral monetary position.

The absence of new language suggesting increased caution—despite recent core inflation stickiness—indicates that most members remain open to continuing the easing cycle, albeit at the current more gradual pace of 25 bps per meeting.

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.

A rate cut in September remains a possibility if the labor market proves to be "on the edge" and weakens sharply, but that seems unlikely at this point. For now, "we have a long way to go to really understand exactly how [the tariff-related inflationary effect] will be."

At her press conference on Thursday after the ECB meeting, President Lagarde said goodbye to journalists and listeners wishing to hear more about a ‘wait and see’ holiday, an expression widely used by central bankers to imply that the next monetary policy moves will depend on how events unfold.

The CBRT cut the policy rate by 300bps to 43%, above the 250bps consensus, with similar cuts in the corridor (41.5%-46%). The tone seems to turn dovish vs. June, signaling scope for continued cuts at each meeting, with the size reviewed with a focus on inflation outlook, despite ongoing price and financial stability risks.