- Decision
- Raise
- Rate change
- 25 bps
- Benchmark rate
- 12.25%
The Central Bank of Colombia raised its monetary policy rate by 25 basis points to 12.25% by majority vote as headline and core inflation increased and near-term inflation expectations rose, maintaining a restrictive stance consistent with an expected decline in inflation during 2027. After holding the rate at 9.25% through December 2025, it raised rates by a cumulative 275 basis points from January to June 2026 to 12%, then held in July. Headline inflation reached 6.2% in August, above the 3% target, while expectations for December 2026 rose to 6.8% and the El Niño phenomenon could add pressure to food and regulated-item prices. Seasonally adjusted gross domestic product grew 3.4% year on year in the second quarter, although the Economic Monitoring Indicator slowed to 1.1% growth in July. International financial conditions tightened somewhat amid prospects of more restrictive monetary policy in advanced economies. Future decisions will depend particularly on information about El Niño, earthquake recovery and fiscal policy measures.
Rate evolution
From June 2025 to September 2026, the policy rate rose by 300 basis points from 9.25% to 12.25%, 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, a July hold and a 25-basis-point increase in September. The extended hold reflected a cautious stance as headline inflation eased unevenly and then rose, core inflation stopped falling, expectations remained above the 3% target, and growth and domestic demand stayed firm, while the Board flagged slower-than-expected inflation convergence, fiscal and external imbalances, trade tensions, geopolitics and Colombia’s sovereign risk even as external financial conditions eased with United States rate cuts.
On July 31, the Central Bank of Colombia’s 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%, expectations increased and activity strengthened, while peso appreciation eased inflationary pressures.
On September 30, the Board raised the policy rate by 25 basis points to 12.25%, with four members backing the decision, two favoring no change and one favoring a 50-basis-point increase, as headline inflation reached 6.2% in August and core inflation rose to 6.1%, its highest level in a year. Analysts’ December 2026 inflation expectation rose to 6.8%, the two-year expectation fell to 4.0%, and public debt market measures remained well above target, while second-quarter GDP grew 3.4% year on year before the Economic Monitoring Indicator pointed to slower activity with 1.1% growth in July and international financial conditions tightened amid prospects for more restrictive policy in advanced economies. The Board said the decision maintained a restrictive stance consistent with a declining inflation path in 2027 and that information on the effects of El Niño, the recovery after the earthquake and fiscal policy measures would be central to upcoming decisions.