Colombia Central Bank Holds Interest Rate at 9.25%

The Central Bank of Colombia raised its policy rate by 100 bps to 10.25% in its January mmeting where four board members voted for the increase, two voted for a 50 bp reduction and one voted to keep the rate unchanged. The board noted that headline inflation in December was 5.1%, slightly below end-2024 (5.2%), while core inflation rose to 5.02% and inflation expectations jumped in January, analysts’ median rose to 6.4% for end-2026 and to 4.8% for end-2027, with market-based two-year expectations above 6%. Indicators for the fourth quarter suggest the economy maintained good dynamism and the technical team estimates GDP grew 2.9% in 2025. The current-account deficit is estimated at 2.4% of GDP for 2025. Uncertainty about external conditions remains elevated due to trade tensions, migration measures in the US, geopolitical conflicts and sovereign-risk perceptions. The committee said the decision is aimed at bringing inflation onto a declining path.

The Central Bank of Colombia kept its benchmark rate unchanged at 9.25% in November 2025. Four board members supported holding rates, while two favored a 50 bp cut and one backed a 25 bp reduction. The board noted that inflation in October remained above end-2024 levels and that inflation expectations one and two years ahead increased. GDP grew 3.4% year-on-year in the third quarter, above forecasts, driven by a 5.6% expansion in total consumption. Policymakers also cited fiscal uncertainty following the failure to approve the Financing Law and a current account deficit of 2.4% of GDP in the third quarter. Despite accommodative global financial conditions after further US rate cuts, elevated geopolitical risks persist. The bank reaffirmed a cautious stance, with future decisions guided by inflation dynamics, economic activity, and domestic and external risks.

The Central Bank of Colombia left its benchmark policy rate unchanged at 9.25% in October 2025, with four directors voting to maintain, two for a 50bps cut and one for 25bps. Annual inflation rose to 5.2% in September while core inflation excluding food and regulated prices remained at 4.8%, both above the 3% target and signalling slower convergence. Inflation expectations increased and survey and market measures now sit above the target for the next two years. Indicators point to continued dynamism in domestic demand led by private and public consumption and a rebound in investment in machinery and equipment and civil works. External financial conditions have eased following US rate cuts, while the trade deficit widened as imports rose faster than exports amid strong domestic demand. The Board emphasised that future policy moves will respond to the evolution of inflation and its expectations, the dynamics of economic activity, and the balance of internal and external risks.