Colombia, Mexico Expected to Hold Rates

Market consensus points to Colombia’s central bank keeping its monetary policy rate intact at 3.0% today. Morgan Stanley expect rates on hold as authorities focus on low current inflation readings and the appreciating currency rather than risks from strong growth translating into inflation next year. Corredores Asociados also believes the rate could be kept at 3.0% to continue stimulating the local economy. Elsewhere, Mexico’s central bank is expected to keep its monetary policy rate unchanged at 4.5% today. “Though inflation has been running well below the central bank’s estimates since the second quarter, the authorities do not seem in any hurry to resume cutting rates given, among other factors, the stubbornly high level of inflation expectations for 2011 and beyond,” says Morgan Stanley. Barclays expects the rate to stay at 4.5% until Q1 2011, tightening by 25bp in Q2 next year.