• Colombia: BanRep Survey: stable inflation expectations, GDP growth forecasts revised lower, and analysts maintain 50bps rate cut view for April


The Central Bank (BanRep) released April’s economist’s expectation survey. Inflation expectations were stable this time; for Dec-2024 and Dec-2025, expectations are at 5.62% and 3.90%, respectively. The inflation expectation for the 2-year horizon (April 2026) increased only by 3bps to 3.61%. In the short-term, the inflation expectation for April is at 0.57% m/m, which could take the annual inflation to 7.14% from the current 7.36%. Scotiabank Colpatria’s projection is 0.59% m/m, and 7.16% y/y. During March, the main contributor to inflation is expected to be the lodging and utilities group, which is similar to previous months. On the other side, tradable goods are expected to continue showing a disinflationary mood. Regarding food prices, we expect moderate positive monthly inflation. However, the annual inflation is expected to rebound as the statistical base of April 2023 was negative.

For the monetary policy rate, market consensus projects a 50bps cut at the April 30th meeting, which is the same expectation that Scotiabank Colpatria has. For the year-end, economist consensus and Scotiabank Colpatria expectations are at 8.25%, while the potential terminal rate could be reached by the end of 2025 at 5.50%, according to the survey. 

In a fortnight, BanRep will decide on the monetary policy rate. Despite the weak economic performance and the disinflationary process, we don’t expect the central bank to accelerate the easing cycle. Recent minutes, among other public speeches, have pointed out that the board prefers to maintain a cautious approach, especially in the context of volatile international markets and domestic risks in terms of the fiscal policy and the political side in general. Having said that, in recent days at Scotiabank Colpatria, we revised the expected path for the monetary policy rate to the upside, and now our expectation is aligned with market consensus (chart 1).

Chart 1: Colombia: Average Headline Inflation Expectations

Key points from the survey:

  • Short-term inflation expectation. For April, the consensus is 0.57% m/m, which implies an annual inflation rate of 7.14% y/y (down from 7.36% in March). The maximum expectation is 0.71%, and the minimum is 0.39%. Scotiabank Economics forecast is 0.59% m/m and 7.16% y/y. In April, the progress of annual inflation towards lower levels will be moderate; food inflation will stop to moderate as significant high statistical base effects vanish. Lodging and utilities will continue to pressure up monthly inflation, while it is worth noting that the effect of the recent gasoline prices increase of 31 pesos is not included in the projection as it took place before the survey. However, we estimate a mild impact of 1bps in the inflation.
  • Medium-term remained broadly stable. Inflation expectations for December 2024 increased by 3bps to 5.62% y/y (table 1). However, the headline inflation expectations for the one-year horizon were 4.67% y/y (-3bps). In comparison, the two-year outlook increased by 3bps to 3.61% y/y. In the case of Scotiabank, we revised our forecast for Dec-2024 from 5.57% to 5.64%.
Table 1: Colombia—Headline Inflation Expectations
  • Policy rate. The median expectation points to a 50bps rate cut at April’s and June’s meeting, while in the rest of the meetings during 2024, expectations point to 75bps rate cuts in each one ( July, September, October, and December). With previous expectations, economists’ consensus points to an 8.25% level for Dec-2024 and 5.50% for Dec-2025. Scotiabank Colpatria’s projection is the same (chart 2).
Chart 2: Colombia: Average Policy Rate Expectations
  • FX. The projections for the USDCOP exchange rate for the end of 2024 averaged 3999 pesos (9 pesos below previous survey). For December 2025, respondents, on average, expect the peso to settle at USDCOP 4020 pesos (previous 3985 pesos).

—Sergio Olarte & Jackeline Piraján