Colombia’s central bank (Banrep) will likely stay on hold at 3% at its September 24 monetary policy meeting, as current inflation, although rising, is still below the central bank’s target of 3% and inflation expectations remain well anchored. Moreover, the economic outlook points to a below potential recovery path. An overvalued currency and heightened global jitters call for a steady monetary policy rate. Needless to say, given the government’s increasing anxiety about the overvalued Colombian peso (COP), attention will be placed on the board discussion about this matter.
Colombia’s Inflation (% y/y), Target Range and Monetary Policy Rate
Source: Banrep and RGE
Editor’s Note: This post is excerpted from a much longer analysis available exclusively to RGE Clients, LatAm Focus: Week Ahead (Week of September 20, 2010)
All rights reserved, Roubini GlobalEconomics, LLC