Implications Of Benign Inflation

BMI View: We maintain our relatively dovish outlook for Colombian inflation as we believe subdued commercial credit growth and further currency appreciation will hold back significant consumer price pressures over the medium term. However, given the strong prospects for increased investment over the coming years, BanRep is likely to opt for policy hike to 3.75% by end-2010 and 4.50% by end-2010 (from 3.00% currently) in order to stave off a rise in consumer price expectations, in our view.

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