The Central Bank of Colombia’s Board of Directors increased the benchmark interest rate by 100 basis points to 10.25% following a majority vote, citing inflation developments and a sharp rise in inflation expectations alongside strong domestic demand. Four directors supported the increase, while two voted for a 50 basis point cut and one favoured keeping the rate unchanged. Headline inflation in December was 5.1% versus 5.2% at end-2024, while core inflation rose from 4.85% to 5.02% between November and December. Analysts’ median inflation expectations for end-2026 increased from 4.6% to 6.4%, and for end-2027 from 3.8% to 4.8%; market-based expectations also rose to above 6% over a two-year horizon. Indicators for the fourth quarter of 2025 pointed to continued strong activity, with staff estimating 2025 GDP growth of 2.9%, and the current account deficit was projected to widen to 2.4% of GDP in 2025 from 1.6% in 2024.
Central Bank of Colombia 2026-01-30
Central Bank of Colombia raises benchmark rate by 100 bps to 10.25%
The Central Bank of Colombia raised the benchmark interest rate by 100 basis points to 10.25%, citing inflation developments and increased inflation expectations amid strong domestic demand. The decision followed a majority vote, with four directors supporting the hike, while two preferred a 50 basis point cut and one advocated for no change.