Colombia Rates Hit Bottom

After cutting 50bp and bringing the monetary policy rate down to 4.50% yesterday – in line with consensus – Colombia’s central bank signals it may not continue easing during this cycle. “We rule out rates hikes this year and assess some probability that the central bank might have to resume the easing cycle before year-end particularly if inflation undershoots the target (which seems increasingly likely), the COP remains well anchored, and the economy remains weak,” says Goldman Sachs. Barclays, which expected the 50bp cut, says “the monetary authority appears to have set its eyes on 2010 already, when the inflation target is planned to be moved down to 4%.” Annual inflation stood at 4.8% in May.