Colombian policymakers unlikely to follow the Fed

The decision by Colombia’s central bank to leave interest rates unchanged at 4.50% last night was not a surprise – but what was more notable was that, given the economy’s large current account deficit, there was no explicit reference to the prospect of a first US interest rate hike in the statement accompanying last night’s decision. For our part, we don’t expect policymakers to follow the Fed. But we do think that, despite slowing growth, rising US rates rule out the chances of rate cuts in Colombia this year and next.