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20 Apr 2015
Colombia will keep rates on hold – Scotiabank
FXStreet (Edinburgh) - According to Eduardo Suarez, Chief FX Strategist at Scotiabank, the Colombian central bank will refrain from easing in the upcoming months.
Key Quotes
“Our sense from the comments made by both FinMin Cardenas, and BanRep Director Meisel, is that the board of the central bank’s base case is that rates will remain on hold over coming months, and potentially until year‐end”.
“Cardenas said the FinMin is set to review its estimates of what Colombia’s potential growth rate is this coming June, with the current estimate being 4.7%”.
“Director Meisel said he expects Colombia will grow between 3.6% and 4.0% in 2015, boosted by experts of agriculture, and industrial products”.
“Meisel’s forecast is more optimistic than the 3.0% ‐ 3.5% estimates by Directors Cano and Maiguashca. Our own view is that Colombia’s potential growth rate is likely to be more in line with the 2015 estimates by Cano and Maiguashca, given we are skeptical that the country’s terms of trade will provide the terms of trade tailwind we saw over recent years, as well as due to our view that investment is also likely to drop given a less benign commodity price outlook”.
“Our view is that potential will more likely lie in the 3.0% ‐ 3.5% range, which is also where we expect 2015 growth will end up”.
Key Quotes
“Our sense from the comments made by both FinMin Cardenas, and BanRep Director Meisel, is that the board of the central bank’s base case is that rates will remain on hold over coming months, and potentially until year‐end”.
“Cardenas said the FinMin is set to review its estimates of what Colombia’s potential growth rate is this coming June, with the current estimate being 4.7%”.
“Director Meisel said he expects Colombia will grow between 3.6% and 4.0% in 2015, boosted by experts of agriculture, and industrial products”.
“Meisel’s forecast is more optimistic than the 3.0% ‐ 3.5% estimates by Directors Cano and Maiguashca. Our own view is that Colombia’s potential growth rate is likely to be more in line with the 2015 estimates by Cano and Maiguashca, given we are skeptical that the country’s terms of trade will provide the terms of trade tailwind we saw over recent years, as well as due to our view that investment is also likely to drop given a less benign commodity price outlook”.
“Our view is that potential will more likely lie in the 3.0% ‐ 3.5% range, which is also where we expect 2015 growth will end up”.