Colombia Surprises with Rate Cut

Colombia’s central bank cut its reference rate to 5.00% from 5.25% in a move that surprised most forecasters. The central bank references global slowdowns and uncertainty as among the factors influencing the cut, its first since 2010. Most chatter ahead of this meeting suggested a hold was likely for the time being, with mixed views on how long the hold would last. “The majority of market analysts were expecting the bank to leave the policy rate unchanged. We were also expecting the MPC to leave the policy rate unchanged at today’s meeting but had assessed some probability (20%-25%) of a surprise rate cut today given the weak real activity prints released in July,” says Goldman Sachs.