Colombia: chance of rate hikes growing

A sharp fall in its currency, rising inflation and a widening current account deficit have increased the chance that Colombia’s central bank will tighten monetary conditions in the coming quarters. For now, given that we still expect fiscal policy to tighten and growth to slow further in the near term, we will stop short of pencilling in any rate rises. Either way, the consensus forecast for rates to be cut over the next year looks off the mark.