Today, September 30, the sixth meeting of the board of directors of Banco de la República takes place in which a decision can be made regarding monetary policy and the rate cut is expected to continue in the face of the fall in inflation, which at the end of August stood at 6.12% annually.
(Read here: How much do analysts expect Banrep to cut interest rates)
The debate in the markets revolves around whether the Issuer will accelerate the pace of declines above 50 basis points (bp) as in its previous meeting in July or will go for the first time in this cycle with a reduction of 75 basis points to leave the rate at 10%.
By leaving it at 10% and with inflation of 6.12%, the real rate would be 3.88%, while if the reduction is 50 bp, the real rate would be 4.13%, a figure still high for some analysts and the Government.
(See here: Why the dollar could lose its 2024 gains and what the Fed has to do with it)
A few days ago, the results of the Anif Survey on the Intervention Rate of the Bank of the Republic were known, corresponding to September 2024, and a consensus was evident among the analysts consulted regarding the need to deepen the process of relaxation of monetary policy.
The survey included the participation of 22 entities, among which 6 stock brokers, 5 international banks, 4 local banks, 3 academic research centers, 2 unions and 2 territorial development banks.
Analysts estimate that the adjustment in the monetary policy interest rate should be greater than the projected decision. In detail, 9 of the entities consulted agree that the rate should and will actually drop 75 bp, while 8 entities believe that the balance will be a decrease of 50 bp.
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Three other entities were located in what is called technical gap, although they anticipate that the Bank of the Republic could reduce rates at 50 bp, Credicorp Capital and Lulo Bank consider that the reduction should be 75 bp.
AllianceBernstein predicts that the decision will be a decrease of 75 bp, although it considers that the ideal would be a reduction of 100 bp or more. Grupo Bancolombia and Skandia also align with the expectation of a 75 bp reduction.
It is observed that half of the consulted entities advocate a bolder decrease in the rate, reducing it by 75 bp.
HOLMAN RODRÍGUEZ MARTÍNEZ
Portfolio
