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Looking at macro indicators, one is left shaking their head as to what the central bank saw two weeks ago when it raised rates to 13.25%.

Year over year Q1 GDP came in at 3.0% versus a consensus expectation of 3.5%, and the QoQ number of 1.4% actually beat the estimate of 1%.

“The dynamics of the domestic demand were weaker than expected” in the third quarter, stated the central bank.

The October rate is up slightly from 3.97% last month and puts inflation outside of the central bank’s target rate for the first time since June.

The move continues a year-long rate-cutting trend but surprised a market that expected the Banco de la República to leave the rate steady.

The Banco de la Repúblcia said that its decision was impacted by the "weakness in economic activity."

July's rate of 3.4% is a decrease from the 3.99% seen in June and represents the 12th straight month that inflation has fallen.

The central bank again expressed concern about economic weakness on top of low domestic demand and low external demand.

The 3.99% rate is 38 basis points below the 4.37% annual inflation seen in May and less than half of the 8.60% rate in June 2016.