Monetary Policy Report - October 2020
La Constitución Política de Colombia y el artículo 14 de la Ley 31 de 1992 asignan al Banco de la República la función de administrar las reservas internacionales. Las opiniones y posibles errores son responsabilidad exclusiva del autor y sus contenidos no comprometen al Banco de la República ni a su Junta Directiva.
Starting in October 2019, the quarterly Inflation Report produced by the technical staff of the Central Bank will be known as the Monetary Policy Report. The document, which is used for the technical staff´s monetary policy recommendation, will be published on the working day after the meeting of the BDBR in January, April, July, and October, simultaneously with the Board minutes.
1.1 Macroeconomic summary [Pág. 1]
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Recent data suggest that the technical staff’s appraisals of the condition and development of economic activity, inflation and the labor market have been in line with current trends, marked by a decline in demand and the persistence of ample excess productive capacity.
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The Colombian economy is likely to undergo a significant recession in 2020 (GDP contraction of 7.6%), though this may be less severe than projected in the previous report (-8.5%). Output is expected to have begun a slow recovery in the second half of this year, though it is not projected to return to pre-pandemic levels in 2021 amid significant global uncertainty.
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Labor market deterioration has been significant, and the unemployment rate remains at historically high levels despite some improvement in total employment, particularly among informal urban workers.
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Inflation projections have been revised upward but remain below 2% for the end of 2020 and 3% for the end of 2021. Average inflation expectations for December are below 2%, and at five years or less continue below or close to the targetrate.
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Both foreign demand and oil prices should continue to recover slowly in 2021, though without returning to pre-pandemic levels. Uncertainty over the pace and sustainability of this recovery is high.
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Global and domestic financial conditions have improved in the context of ample liquidity, though some indicators have not yet returned to pre-pandemic levels.
1.2 Monetary policy decision [Pág. 3]
Boxes
César Anzola-Bravo, Anderson Grajales-Olarte, Alexander Guarín-López, Julián Camilo Mateus-Gamboa, Jonathan Alexander Muñoz-Martínez, Carlos Andrés Quicazán-Moreno, Juan Sebastián Rojas-Moreno, Cristhian Hernando Ruiz-Cardozo
Andrés Sánchez-Jabba
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