RIO DE JANEIRO, BRAZIL – JPMorgan released a new commentary on what is expected to be the behavior of inflation in Colombia in the coming weeks.
The first point of analysis focuses on the fact that inflation expectations continued to increase in the most recent monthly survey of analysts of the Central Bank of Colombia (Banco de la República).
With this as a base, JPMorgan expects March inflation to be high again after January and February data took Colombia’s inflation to 8%.
“The December 2022 consensus median expectation now stands at 6.42%, an increase of 98 basis points since February and 194 basis points since the beginning of the year,” the document adds.
Additionally, the firm explains that longer-term inflation expectations continue to be less affected, with the caveat that they also continue to rise.
OTHER INFLATION OUTLOOK
“Our forecast, revised again last week to reflect higher food prices rather than fuel prices (which are subsidized), is for inflation of 6% by December (below the consensus median forecast) and 4.3% by the end of 2023,” the paper says.
At the same time, JPMorgan expects the Central Bank to maintain its decision to raise interest rates in its next Board of Directors.
“We see an unprecedented increase of 150 basis points at the end of March meeting to 5.5%,” says the analysis. Understanding that uncertainty over the elections may continue to raise inflation expectations.
“Gustavo Petro’s party did well in Congress and is poised to win seats after a recount, but that body will remain highly fragmented without a majority coalition. The presidential election may yet polarize into a tight race between pro and anti-Petro camps,” the paper adds.
Finally, for JPMorgan, the fact that candidate Gustavo Petro has referred to the use of emergency decrees to implement his agenda without Congress is a matter of alert.
This position “worries for the political perspective, including the possibility of pressure on the central bank,” concludes the analysis.
With information from Valora Analitik