- Decision
- Raise
- Rate change
- 75 bps
- Benchmark rate
- 12%
On June 30, 2026, the Central Bank of Colombia’s board voted by majority to raise the benchmark rate by 75 basis points to 12%, aiming to put inflation back on a downward path as price pressures, expectations and domestic demand remained firm; four directors backed the move, while two preferred a 50-basis-point reduction and one voted to leave the rate unchanged. The board said total inflation rose to 5.8% in May and core inflation excluding food and regulated items reached 6.0%, moving further away from target, while inflation expectations were volatile in 2026 and remained above target across all horizons despite a partial reversal in market-based measures in June. On activity, seasonally adjusted annual GDP growth was 2.2% in the first quarter of 2026 and domestic demand continued to outpace output, while the labor market showed historically low unemployment at 8.0% in May alongside significant wage gains. The board also cited high external uncertainty linked to the conflict in the Middle East, with effects on international fuel and fertilizer prices and on financial markets’ reactions to monetary policy decisions in advanced economies, and said future decisions will depend on incoming information.
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.