Colombia | BanRep kept its policy rate stable in June at 13.25%.

Summary

Banco de la República kept its policy rate stable in June at 13.25%, in line with our outlook and analysts consensus. The decision was unanimous showing a significant change in the balance of the Board versus April (when 5 members voted for some rate increase).

Key points

• Key points:
• The Board, in a unanimous vote, kept the monetary policy rate unchanged at 13.25%, the level reached at its last meeting in April. It is worth mentioning that the decision was unanimous, a relevant adjustment in the Board's balance, given that at the April meeting 5 voted for some increase in rates.
• The Board pointed out that inflation continued to decrease in May, adding to the already observed reduction in April. This moderation, they highlighted, is associated with food inflation while administered prices and services inflation increased.
• In the press release, they highlight that the economy reached a growth of 3.0% in the first quarter and that the loss of dynamism continued in April. In the press conference, the Governor highlighted that the forecast remains, for the moment, at 1.0% growth for 2023
• The appreciation of the exchange rate in Colombia is highlighted, which may be associated with the reduction of risk premiums. They emphasize that this behavior has occurred in the midst of high global uncertainty and reduction in oil prices.
• The Board's decision is in line with our expectation and the analysts' average. While the decision is to hold rates steady, significant confirmation of the inflation trend is required to initiate a downward cycle in rates.

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