- Decision
- Maintain
- Rate change
- 0 bps
- Benchmark rate
- 9.25%
The Board of Directors of Banco de la República on 19 Dec 2025 left the benchmark rate at 9.25%, with a 4-2-1 split (two members sought a 50 bp cut and one a 25 bp cut), arguing that although headline inflation eased to 5.3 % y/y in November from 5.5 % in October and core inflation fell to 4.9 %, both remain above end-2024 levels while one- and two-year inflation expectations have risen. The rate has been unchanged at 9.25 % since an initial 25 bp cut in April 2025. Third-quarter GDP expanded 3.4 % y/y, surpassing staff forecasts as domestic demand and 5.6 % consumption growth widened the current-account deficit to 2.4 % of GDP from –1.5 % a year earlier, while the failure of the Financing Law raises fiscal-balance risks for 2026. External financing conditions are described as favorable after a third consecutive U.S. rate cut to 3.5-3.75 %, though geopolitical tensions persist. The majority decision maintains a cautious stance, with future moves contingent on the evolution of inflation and expectations, economic activity and the balance of domestic and external risks.
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.