Macroeconomic Forecast Colombia

March 2007 | Macroeconomic Forecasts

BMI View: In line with our view, the Colombian central bank, BanRep, raised its benchmark interest rate by 25 basis points (bps) for a fourth successive month in February to 8.00%. The current tightening cycle has now seen 200bps worth of rate hikes in the space of ten months, and there are signs it may not have finished just yet. BanRep chairman José Dario Uribe admitted in a public interview that the central bank may need to raise the interest rate further to dampen inflationary expectations. We remain on the side of BanRep performing at least one more 25bps hike during this tightening cycle, before adopting a 'wait and see' approach.

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