Colombian Yields Rise on Speculation Rate Cuts Over; Peso Gains

Colombian peso bond yields rose as Finance Minister Mauricio Cardenas said last month’s surprise half-point interest-rate reduction may bring to an end a cutting cycle that began in July.

Yields on peso bonds due 2024 climbed 10 basis points, or 0.1 percentage point, to 5 percent at the close of trading in Bogota, according to the central bank. The price fell 1.121 centavos to 142.363 centavos per peso. Colombian markets were closed March 28-29.

Policy makers accelerated the pace of borrowing-cost cuts on March 22 when they lowered the target lending rate by 50 basis points to 3.25 percent, surprising all 32 analysts surveyed by Bloomberg. They have reduced the key rate 2 percentage points since the beginning of cuts in July. Twenty-seven economists predicted another quarter-point cut last week while five projected no change.

“It does look like we’ve reached the end of the easing cycle,” said Daniel Lozano, the head analyst at Serfinco SA brokerage in Bogota. “That goes against the view of some who are still expecting more cuts.”

The peso appreciated for a second consecutive session, advancing 0.1 percent to 1,822.48 per U.S. dollar. It has slumped 3 percent this year.

Colombia is “getting close to the end of what the central bank can do in terms of cutting its interest rates,” Cardenas, who is also president of the monetary authority’s board, said on RCN Radio today. He also said he expects the peso to weaken toward 1,900 and hopes “we get there quickly.”

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