- Colombia: BanRep Survey—Inflation expectations remained stable while consensus median holds expectation for 50bps rate cut in June
The central bank (BanRep) released the economist’s expectation survey for May. Inflation expectations were stable. For Dec-2024 and Dec-2025, expectations are at 5.68% and 3.96%, respectively. The inflation expectation for 1-year is at 4.58%, approaching the target range, while the 2-year horizon (May 2026) decreased by 2bps to 3.60% (chart 1). Regarding short-term inflation expectations for May, the expectation is at 0.41% m/m, which could take the annual inflation to 7.14% from the current 7.16%. Scotiabank Colpatria’s projection is 0.54% m/m, and 7.28% y/y, which is the highest expectation of the survey. During May, the main contributor to inflation is expected to be the lodging and utilities group, while tradable goods are expected to stabilize. Food inflation is expected to continue to be high as a result of lower supply, however food inflation will help accelerate the annual inflation as the food group is replacing a low statistical base of May-2023 (~-0.8% m/m).
For the monetary policy rate, market consensus projects a 50bps cut in the June 28th meeting, which is the same expectation that Scotiabank Colpatria has. For the year-end, the economist consensus expectation increased from 8.25% to 8.50%, while Scotiabank Colpatria’s expectation remains at 8.25%. The terminal rate estimation is at 5.50% at Scotiabank Colpatria, while economist consensus points to 5.25%, reaching this level in Q1-2026.
In April, the central bank reaffirmed its cautious approach due to the changing international context and domestic uncertainty. The stability on inflation expectations is good news; however, we think it won’t be enough to trigger an acceleration of the easing cycle because since May, the disinflationary process has been slower, and the central bank has already said that it prefers to go slow to avoid missteps.
Key points from the survey :
- Short-term inflation expectation. For May, the consensus is 0.41% m/m, which implies an annual inflation rate of 7.09% y/y (down from 7.16% in April). The maximum expectation is 0.54% (Scotiabank Colpatria), and the minimum is 0.19%. Scotiabank Economics forecast is 0.54% m/m and 7.28% y/y. In April, the progress of annual inflation towards lower levels will be moderate; food inflation will stop moderately as significant high statistical base effects vanish. Lodging and utilities will continue to pressure up monthly inflation, as rent fees indexation is higher than anticipated.
- Medium-term improved. Inflation expectations for December 2024 increased by 6bps to 5.62% y/y (table 1). However, the headline inflation expectations for the 1-year horizon is 4.58% y/y (-8bps). The 2-year inflation expectation decreased by 2bps to 3.60% y/y. At Scotiabank, we revised our forecast for Dec-2024 from 5.64% to 5.8% amid higher indexation effects.
- Policy rate. The median expectation points to a 50bps rate cut at both June and July meetings, while in the rest of the meetings during 2024, expectations point to 75bps rate cut in each one (September, October, and December). With previous expectations, economists’ consensus points to an 8.50% level for Dec-2024 and 5.50% for Dec-2025. Scotiabank Colpatria’s projection is similar since we expect 8.25% for Dec-2024 (chart 2).
- FX. The projections for the USDCOP exchange rate for the end of 2024 averaged 4002 pesos (3 pesos above previous survey). For December 2025, respondents, on average, expect the exchange rate at USDCOP 4036 pesos (previous 4020 pesos).
—Sergio Olarte & Jackeline Piraján
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