Rhythmic Reasoning_Full Report_Final_EN - Flipbook - Page 40
THE DRUMMER'S EAR | RHYTHMIC REASONING
Fig. 4: Stubbornly high inflation keeps
BanRep in highly restrictive stance
20%
YoY % change
15%
10%
5%
On the other hand, maintaining restrictive interest rates make
Colombia attractive for investors pursuing carry trade strategies, in
fact the Colombian peso is at its strongest levels since mid-2024
fueled partially on rate differentials against the USD, but also as
the result of expectations for significant monetization of foreign
debt by the Government. Despite macro models pointing to a
fundamental value of the USDCOP of around 4100 pesos per dollar
compared to 3,850 currently, this deviation could last for a while
due to sizable expectations for FinMin operations.
0%
-5%
2016
2018
2020
2022
Headline inflation
Ex food & regulated
3% goal
BanRep real policy rate
2024
Regulated goods & serv.
Going forward, the Colombian economy will continue to show
a recovery in the private sector with more sustainable sources
of growth than those evidenced the previous year. However,
international and local uncertainty – mainly on the fiscal front –will
act as headwinds over the remainder of 2025 and into 2026.
Source: DANE, BanRep, Scotia Wealth Management.
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