In the communique, the board highlighted that headline inflation has started to slow down, but remains well above the central bank’s target. However, they also remarked that inflation expectations have decreased, which is a positive development with the two-year-ahead expectations now closer to the ceiling of the target range (of 2% to 4%).Given that, we affirm our expectation of a rate cut in October by this time, we expect lower inflation expectations and a more evident downward trend in core prices. However, before starting the easing cycle, Governor Villar said observing a decrease in core inflation is crucial. Also, they remarked that a slowdown in economic activity is necessary to achieve long-term sustainability.Ĭommunications during the press conference signalled that the hiking cycle has ended, with no signals of leaving the door open for further hikes. Both affirmed that future rate moves would strongly depend on inflation developments.

They said the increase in gasoline prices due to the fuel subsidy reduction will make inflation decrease at a slower rate. Governor Villar and Minister Bonilla highlighted that the uncertainty regarding the inflation outlook remains given potential events such as El Niño weather phenomenon. During the press conference, Governor Villar highlighted that the monetary policy rate remains contractionary and is consistent with the appropriate level to achieve the inflation target. The decision was unanimous, and the board emphasized the data-dependent approach for forthcoming meetings. The Board of Colombia’s Central Bank (BanRep) kept the policy rate at 13.25%, pausing the hiking cycle that began in September 2021 and after 11.50 pps of increases.

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