Colombia: Banco de la República decides its interest rate today amid split forecasts

Bogotá — The board of Colombia's Banco de la República began its monetary policy meeting this Friday to decide the benchmark interest rate, currently at 12.25%, in one of the most closely contested decisions in recent months, with analysts' forecasts split.

In a Reuters poll conducted this week, 17 of the 31 analysts surveyed expect a 25-basis-point increase that would take the rate to 12.50%, one projects a more aggressive 75-basis-point hike to 13%, and the remaining 13 expect the bank to hold steady pending fresh economic data. A Bloomberg survey, by contrast, found 17 economists expecting no change at 12.25% and 14 forecasting a quarter-point increase.

If the majority view in the Reuters poll prevails, it would be the second consecutive month in which the monetary authority raises the rate, for a cumulative increase of 325 basis points so far in 2026. "We foresee a rate increase given elevated inflation and its upside risks, in addition to the current difficult fiscal situation," Bancolombia wrote in a note, according to Reuters.

Latin America's fourth-largest economy recorded annual inflation of 6.29% through September, more than double the central bank's 3% target, which would mark six consecutive years of missing the goal, and authorities and the market expect the same in 2027.

The decision comes in the same week that the U.S. Federal Reserve and Chile's central bank kept their benchmark rates unchanged. In mid-October, Banco de la República co-director Laura Moisá told Reuters that raising the rate might not have the same impact on inflation as it would at another time, but it would be affecting investment decisions in the country.

As there will be no monetary policy meeting in November, the decision adopted this Friday will set the course for the cost of credit through the end of the year. A further increase could make consumer loans, credit cards and some housing loans more expensive, according to analysts consulted by Colombian media.

Photo: Bloomberg Línea

Source: Reuters and Bloomberg Línea