- Decision
- Maintain
- Rate change
- 0 bps
- Benchmark rate
- 9.25%
The Board of Directors of the Banco de la República kept the policy rate at 9.25 percent on a 4-3 vote, citing a renewed rise in inflation—headline inflation climbed for a third month to 5.2 percent in September while core inflation held at 4.8 percent—and inflation expectations that remain above the 3 percent target against a backdrop of buoyant domestic demand and stronger investment. Following a single 25 bp cut in April that brought the rate to its current level, the Board has maintained this stance at every meeting since. Survey- and market-based inflation expectations exceed target, economic indicators point to resilient consumption and a rebound in machinery, equipment and civil-works investment, and the trade deficit is widening as robust imports meet falling mining and energy export volumes. Although external financial conditions have eased after rate cuts in the United States, the Board judged that upside risks to inflation warrant caution; it reiterated that future decisions will depend on the trajectory of prices and expectations, domestic activity, and internal and external risks, while two members preferred a 50 bp cut and one sought a 25 bp reduction.
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.