The Central Bank of Colombia reported a majority board decision supporting a restrictive monetary policy stance consistent with reducing inflation in 2027. Headline inflation edged higher and inflation expectations remained above the 3% target, despite signs that economic growth slowed in the third quarter. Annual inflation reached 6.3% in September, slightly below market expectations, while core inflation excluding food and regulated prices fell to 6.0% from 6.1% in August. El Niño poses a significant upside risk to food and regulated prices. Analysts’ inflation expectations for December 2026 increased slightly to 6.9%, while expectations at a two-year horizon remained around 4.0%. Expectations derived from public debt securities rose over shorter horizons and remained above target across all horizons. Estimated third-quarter growth slowed compared with the previous quarter, with indicators pointing to weaker private and public consumption growth and weak activity across economic sectors. Public finances remain a key factor in the economic outlook and efforts to bring inflation to target. The board emphasized the importance of a rigorous review of the Economic Recovery Bill submitted to Congress.
Central Bank of Colombia backs restrictive monetary policy as inflation expectations remain above target
A majority of the Central Bank of Colombia’s board supported restrictive monetary policy to help reduce inflation in 2027. Annual inflation rose to 6.3% in September, and inflation expectations remained above the 3% target despite signs of slower economic growth. The board also stressed the importance of public finances and rigorous scrutiny of the Economic Recovery Bill.