Colombia Surprises With Easing

Colombia’s central bank has cut the monetary policy rate by 50bp to 4.0%. Market consensus expected the bank would leave the rate unchanged at 4.5%. The central bank says the cut seeks to secure the economy’s recuperation and reduce possible negative effects on the economy caused by commercial restrictions and currency appreciation. Venezuela, one of Colombia’s major commercial partners, is threatening to block Colombian imports. RBS Securities says Colombia’s central bank is worried about the appreciation of the COP, up almost 25% since Q1. “We don’t expect additional cuts also because the economy seems to have bottomed out,” says the shop.