What Jumps Out: ’50 bps… Are you kidding me?’

The Bank of the Republic of Colombia just made a shocking decision by lowering interest rates by only 50 bps to 10.25%. The consensus expectation was 75 bps, with hopes set at 1%. This is quite a pathetic decision and potentially reflects the fact that many observers feel the committee has become politically tainted, as the majority of its members were appointed under the Duque administration.

One hopes that is not the case, as Colombia prides itself on institutional independence. However, there is no justification for such a weak decision, given that inflation fell more than expected in August to 6.1% (5.5% core), and the Central Bank hasn’t met since the end of July.

A shockingly poor message for the markets and the economy at a time when there are signs of economic recovery and 2024 GDP estimates are being raised by everyone.

Poor from Villar and his team.