attractive landscape in Colombia

Colombia Monetary Policy July 2023

Colombia: BanRep leaves policy rate unchanged in July

At its 31 July meeting, the board of directors of Colombia’s Central Bank (BanRep) unanimously voted to keep the benchmark interest rate unchanged at 13.25%. The decision, which was expected by the market, marked the second pause in a row following a cumulative 1,150 basis point increase since September 2021.

In justifying its decision, BanRep noted that economic activity had slowed more than expected in April and May, helping to bring down price pressures. BanRep noted that inflation in June was 1.0 percentage point below that seen in December 2020 and that inflation expectations had improved. Year-ahead inflation expectations stood at 6.2% in July, closer to the BanRep’s 2.0–4.0% medium-run target than the 6.7% seen at the last policy meeting in May.

Given the slowing economy and the recent deceleration of inflation expectations, most of our panelists believe that the Bank has reached the end of its hiking cycle and will begin lowering rates with a 25 basis point cut in September. That said, there are some notable upside risks: Firstly, core inflation could be more persistent than expected due to the prevalence of salary indexation; Secondly, headline inflation could rise more than expected due to the recent removal of fuel subsidies; Thirdly, the El Niño weather pattern could cause food prices to rise by more than projected.

The next monetary policy meeting is scheduled for 29 September.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest X Download Fullscreen