Colombia's central bank raises rate by 25 bps to 12.25%

Banco de la República decided on September 30, 2026, to raise Colombia's benchmark interest rate by 25 basis points to 12.25%. The board reached the decision through a split vote. Two board members voted to keep the rate unchanged at 12.0%, while one member voted for a 50 basis point hike.

The monetary authority pointed to annual headline inflation, which increased to 6.2% in August. Price pressures came primarily from food, with inflation at 6.1%, and regulated items, which reached 6.8%. Services inflation rose to 7.2% annually, while core inflation excluding food and regulated items increased to 6.1%, marking its highest level in the past year. The board also noted that the El Niño weather phenomenon could keep upward pressure on food and regulated prices.

Economic analysts surveyed in September raised their inflation expectations for December 2026 to 6.8%, while their two-year expectations dropped to 4.0%. Expectations derived from the public debt market remained substantially above the central bank's target.

On economic activity, seasonally adjusted gross domestic product expanded by 3.4% year on year in the second quarter. The economic tracking index (ISE) slowed to a 1.1% annual increase in July. Manufacturing fell 2.3% annually, while total real retail sales grew 5.3% in July, matching a 22.3% annual rise in dollar imports. The board added that global financial conditions tightened due to expectations of more restrictive policy in advanced economies.