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Rate cuts in Colombia dependent upon global weakening

The Colombian central bank (BANREP) appears to have signalled that further interest rates cuts are contingent upon a deterioration in the global environment. We think that a deepening of the euro-zone debt crisis and sharp falls in commodity prices will eventually lead to another 50bp of cuts to 4.25% over the coming months. However, until those events develop, rates look set to remain on hold.

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