Colombia | Banco de la República maintained its policy rate stable at 9.5%

Summary

The Board of the Banco de la República kept the policy rate unchanged at 9.5% in a split decision (4 to 3). The decision was based on inflationary and fiscal risks, as well as external uncertainty.

Key points

• Key points:
• The interest rate remained at 9.5% with a divided vote (4 in favor of maintaining stability, 3 in favor of a 50bps cut).
• Headline inflation stood at 5.3% with pressures from regulated prices and food, while core inflation declined slightly to 4.9%.
• The Bank emphasized fiscal vulnerability as a key factor in its decision, given its potential impact on country risk and the exchange rate.
• Economic growth showed signs of improvement, with the GDP forecast for 2025 revised upward from 2.6% to 2.8% driven by a better performance in the first quarter.
• Future decisions will depend on the evolution of inflation, tax revenue, and the external environment, with a possible rate cut in the coming months if significant improvements are observed.

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