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Investing.com - Colombia’s central bank (Banrep) is widely expected to cut interest rates by 25 basis points to 9% at its July 31 meeting, resuming its easing cycle after holding rates steady in June.
The bank’s board remains deeply divided on monetary policy, with its last decision showing four members voting to hold rates, two supporting a 50 basis point cut, and one favoring a 25 basis point reduction. UBS forecasts interest rates to reach 8% by year-end, compared to market pricing of approximately 8.7%.
Growth data scheduled for release this week could increase pressure on Banrep to cut rates. UBS expects May industrial production to show 0% year-over-year growth and retail sales to increase 9% year-over-year. The June inflation report already showed headline inflation dropping below 5% for the first time since October 2021, though core inflation remained unchanged at 4.8%.
Colombia may also face scrutiny from the United States regarding tariffs, following similar letters sent to Brazil and Mexico last week. The current tariff rate between the U.S. and Colombia stands at approximately 10%.
While trade between Colombia and the United States appears broadly balanced, non-trade issues could potentially lead to higher tariff outcomes for the South American nation.
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