Colombia’s short-term peso bonds
will likely advance on speculation the central bank will reduce
its overnight lending rate this week, according to RBS Greenwich
Capital Markets Inc.
Policy makers will cut the overnight lending rate a quarter
percentage point to 9.75 percent at their Oct. 24 meeting, the
firm estimates. Banco de la Republica has lifted its key rate 4
percentage points since April 2006, to a seven-year high of 10
percent.
“Although throughout the region we are seeing economic
deceleration, it’s much more accentuated and first began in
Colombia,” said Benito Berber, a macro strategist with RBS in
Greenwich, Connecticut. “Short-term bonds, mainly one or two-
year securities, should continue to advance on expectations of a
rate cut.”
The yield on the peso bond due July 2009 fell 3 basis
points, or 0.03 percentage point, to 10.30 percent at 2:08 p.m.
New York time, according to Colombia’s Stock Exchange.
Colombia’s economy expanded at the slowest pace since 2005
in the second quarter as efforts to stem inflation damped
consumer and industrial spending. The economy grew 3.7 percent
in the April-through-June period, down from 4.5 percent in the
first quarter.
Banco de la Republica will leave the rate unchanged at 10
percent at this week’s meeting, according to the median forecast
of 21 economists surveyed by Bloomberg News. (Bloomberg)
