Colombia Rates to Stay Put

Colombia’s central bank is expected to keep its rate on hold at 3.50% today. Bank of America Merrill Lynch expects the bank to stick at this level until June, when it forecasts a 50bp hike to 4.00%. Morgan Stanley meanwhile expects 200bp of interest rate hikes in H2, with the central bank tightening to 5.50% by December. “With inflation at the lowest point since late 1955 and ample slack in the economy there is little in the way of inflation pressure in the near term,” says Morgan Stanley. “But with an aggressive new target – 3% with a 1% tolerance band – and with real rates already in negative territory for the first time in recent history, the central bank is unlikely to cut rates either,” it adds.