Colombia Holds Steady on Rates

In line with market expectations, Colombia’s central bank has decided not to cut its monetary policy rate, leaving it at 4.5%. “The balance of risks on inflation is very favorable and there is now a high probability that inflation will undershoot the target in 2009,” says Goldman Sachs. “Actual inflation continues to surprise on the downside and inflation expectations continue to move down (and in some cases are already under-shooting the target),” it adds. Morgan Stanley had not anticipated new cuts either, as the central bank had already signaled that the easing cycle had come to an end. It looks for the rate to remain at 4.50% into 2010.