Colombia Sticks on Interest Rate

Colombia has left its benchmark interest rate unchanged at 9.75%, citing external conditions that favor economic growth, as well as a deceleration in inflation, which in April closed at 5.73%, down 20bp from March. The central bank’s priority should remain controlling inflation dynamics while resisting the temptation to subordinate this to other objectives like the exchange rate, according to Goldman Sachs. The shop expects the central bank to ignore political calls for easing and to support an economy that is still growing. “We expect the policy rate to remain unchanged at 9.75% for the time being and do not rule out that further worsening of the inflation dynamics might justify additional tightening,” GS says.