attractive landscape in Colombia

Colombia Monetary Policy May 2020

Colombia: BanRep slashes policy rate to new record low

On 29 May, Colombia’s Central Bank (BanRep) decided to cut the benchmark interest rate by 50 basis points to a new record low of 2.75%. The move marked the Bank’s third consecutive cut as it tries to support the economy amid a likely deep recession due to the Covid-19 pandemic and low oil prices. The decision was, however, not unanimous: Two board members voted for a smaller 25-basis-point cut.

Falling inflation and grim economic conditions fueled BanRep’s decision to cut rates once again in May. In its accompanying statement, the Bank stated that inflation expectations continued to drop in April and that there appears to be growing able spare capacity in the Colombian economy and a drastic worsening in the labor market. In addition, a recent improvement in financial and exchange rate markets have helped create space for the Bank to provide additional monetary policy stimulus.

Looking ahead, the Bank’s communiqué was devoid of forward guidance; however, most of our FocusEconomics’ panelists see the Bank chopping the policy rate further to support the battered economy.

The next meeting will be held on 1 July.

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