Colombia’s outperformance, Banxico’s divide

This week’s activity data point to a big divergence in growth across Latin America, with Argentina underperforming and Colombia leading the pack. But growth in Colombia remains worryingly unbalanced, which is likely to add to inflation pressures and cause the current account deficit to widen. Elsewhere, the minutes to Banxico’s meeting earlier this month point to divisions on the Board on the inflation picture. We agree with the view of the more hawkish members (currently a minority). As inflation surprises to the upside, we think rate hikes are likely to come onto the agenda later in the year.