EM LATAM CREDIT: Republic of Colombia (COLOM; Baa2neg/BB+neg/BB+) Inflation

“COLOMBIA MAY MISS ITS INFLATION TARGET IN 2025: VILLAR” - BBG

Neutral for spreads

• Colombia March inflation will be reported in a few days April 7th. February inflation was higher than expected at 5.28% YoY while the core rate was 5.44% and the monthly number was 1.14%, up from .94% the previous month.

• Central Bank President Villar said he expected core inflation prices to fall in the future but last month they went up so we will soon see if that trend reverses.

• In the budget plan submitted February 2025, the government projected inflation to end the year at 3.6%. The IMF forecasts consumer price inflation of 4.5% for 2025.

• The Central Bank opted to leave the local policy rate unchanged at 9.5% earlier this week against the objections of the administration and that could be a drag on economic growth.

• Two recent Central Bank appointees of President Petro as well as the new finance minister German Avila voted for a cut of 50bps in the policy rate while the other 4 members voted to keep the rate unchanged due to concerns about elevated inflation.

• Colombia 10-year bonds were last quoted T+374bps, the widest level in over a year and are already quoted 116 bps wider than Brazil (BRAZIL; Ba1pos/BB/BB) so a negative credit trend is already reflected.