Persistent Headline Inflation And Growth To Drive BanRep's Continued Rate-Hiking Cycle In 2022

• Fitch Solutions forecasts that Colombia’s Banco de la República (BanRep) will raise its policy rate by 250 basis points to 10.00% by end-2022, after hiking it by 150 basis points, to 7.50%, at its most recent meeting on June 30. 
• Rising commodity prices will drive 8.9% y-o-y average inflation in 2022, far above BanRep’s target range. 
• Along with a strong growth outlook and hikes from the US Federal Reserve, this underpins the view that BanRep will pursue a more hawkish monetary policy in the months ahead. 
• The incoming administration of President-elect Gustavo Petro poses downside risks to the country’s monetary policy outlook.

 

(Source: Fitch Solutions)