Colombia | BanRep: A welcome surprise!

Summary

The Banco de la República kept its interest rate unchanged in March, in a context of mixed variables surrounding the decision. In the end, the Bank prioritized economic stability, offering a significant demonstration of independence and technical expertise.

Key points

• Key points:
• At the beginning of March, BanRep’s expectations survey showed a consensus in favor of a rate cut, which gradually faded over the course of the month. The Bank ultimately decided to hold the interest rate steady.
• Supporting the case for stability were slightly rising headline inflation, a strong yet tight labor market, and significant fiscal challenges.
• Supporting the case for a rate cut were declining core inflation, weakness in sectors highly sensitive to interest rates, a stronger peso, and a less pressing external environment.
• In the end, BanRep’s decision prioritized macroeconomic stability through a highly technical and independent stance, enabling the economy to continue on its path to recovery within a context of increased confidence in the country’s economic institutions.

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