- Decision
- Maintain
- Rate change
- 0 bps
- Benchmark rate
- 9.5%
The Board of Directors of Banco de la República kept the monetary policy rate at 9.5%, judging that inflation remains above the 3 % target and that fiscal and external uncertainties continue to pose upside risks even as activity strengthens. The rate has been unchanged at 9.5 % since January, following a cutting cycle that began in December 2023. Headline inflation in February inched up to 5.3 %, with processed foods and regulated prices driving the rise, while core inflation eased to 4.9 %; market-based expectations fell but survey measures rose, both still above target at one- and two-year horizons. GDP grew 2.4 % y/y in 2024 Q4, January’s ISE was up 2.5 %, and the central bank’s staff has lifted its 2025 growth forecast to 2.8 % amid a resilient labour market marked by higher employment and lower unemployment. The Board noted that global financial conditions remain restrictive as US monetary normalization progresses slowly and policy uncertainty around US trade and migration persists. Directors signalled a cautious stance, indicating that forthcoming data will guide the timing and scale of any further easing while they seek inflation convergence alongside ongoing economic recovery.
Rate evolution
From June 2025 to July 2026, the policy rate rose by 275 basis points from 9.25% to 12.0%, after a prolonged hold through end-2025, two 100-basis-point increases in January and March 2026, an April pause, a 75-basis-point increase in June and a July hold. The extended hold reflected a cautious stance as headline inflation eased only unevenly and then picked up again, core inflation stopped falling, inflation expectations remained above the 3% target, and growth and domestic demand stayed firm, with consumption and investment strengthening. Risk language stayed cautious throughout, first emphasizing slower-than-expected inflation convergence, fiscal-deficit and public-finance concerns, and a wider trade and current-account deficit linked to strong imports, then acknowledging that external financial conditions had eased with United States rate cuts even as uncertainty around trade tensions, geopolitics and Colombia’s sovereign risk remained high.
In the most recent decisions, a sharp rise in expectations, renewed increases in headline and core inflation, resilient activity and a dynamic labor market prompted tightening, before the Central Bank of Colombia’s Board held the policy rate at 11.25% in April and raised it by 75 basis points to 12.0% on June 30, citing continued inflation pressures, domestic demand growth exceeding output growth, low unemployment and high external uncertainty. On July 31, the Board held the policy rate at 12.0% by a four-to-three vote, with three members favoring a 50-basis-point increase, as headline inflation rose to 6.1% in June, core inflation remained at 6.0%, and expectations for December 2026 and 2027 increased to 6.6% and 5.0%, respectively, while market-based expectations remained above 6.0% across all horizons. Available data pointed to stronger second-quarter activity, a 2.5% staff projection for 2026 growth and unemployment of 8.0% in June, while peso appreciation eased inflationary pressures and risks from the Middle East conflict and a possible El Niño event persisted. The Board said the decision maintained a restrictive stance consistent with inflation declining in 2027 and left future moves dependent on incoming information.