Colombia Monetary Policy January 2017


Colombia: Central Bank holds the lending rate unchanged in January

January 27, 2017

The board of the Central Bank (BanRep) decided to keep the lending rate unchanged at 7.50% in a 4-to-3 decision at its 27 January monetary policy meeting, which was the first to be headed by recently appointed Governor Juan José Echavarría. The decision surprised market analysts, which had widely expected the Bank to cut rates for a second consecutive month.

The decision to hold rates came after inflation eased for a fifth consecutive month in December, falling to 5.8%, the lowest reading in 2016. According to the Bank’s official statement, the supply-side shocks that had derailed inflation from its target continue to reverse, as evidenced by a slowdown in food prices. Despite the improvement, inflation expectations remain above the 3.0% target.

While the Bank acknowledged that the economy likely remained sluggish in Q4, it highlighted that the recovery of external demand in 2017 will be faster than expected thanks to higher projected growth in Colombia’s main trading partners. The Bank also observed that uncertainty regarding international financial and trade conditions had increased since December’s board meeting, which will likely impact global interest rates and the U.S. dollar. Commenting on the latest monetary policy decision, Ben Ramsey, Emerging Markets Sovereign Risk Analyst and Katherine V. Marney, Economist at JP Morgan said: 

“BanRep seems to be straddling a data-dependent stance with an easing bias. The data-dependent stance would seem to primarily be focused on inflation and inflation expectations. With BanRep’s new governor wanting to see inflation expectations behave better, we see another pause in February, with the easing cycle commencing again in March.”

The Bank concluded its statement by praising the government’s recently approved tax reform, which includes a broadening of the tax base and a Value-added Tax hike. BanRep considers that the tax reform will help to consolidate Colombia’s fiscal and external sustainability as well as allowing for higher long-term economic growth.

The next monetary policy meeting is scheduled for 24 February.

Panelists participating in the LatinFocus Consensus Forecast see the policy rate ending 2017 at 4.2% and they expect it to end 2018 at 3.4%.

Author:, Economist

Sample Report

Looking for forecasts related to Monetary Policy in Colombia? Download a sample report now.


Colombia Monetary Policy Chart

Colombia Monetary Policy January 2017

Note: Central Bank policy rate in %.
Source: Colombia Central Bank.

Colombia Economic News

  • Colombia: Inflation remains steady in June

    July 5, 2018

    According to the National Department of Administrative Statistics (DANE), consumer prices rose 0.15% over the previous month in June, a smaller rise than the 0.25% month-on-month increase in May.

    Read more

  • Colombia: PMI shoots up to two-and-a-half year high in June

    July 3, 2018

    The seasonally-adjusted Davivienda manufacturing Purchasing Managers Index (PMI) climbed to 53.0 in June, up from 51.1 in May, which marks the highest result since January 2016.

    Read more

  • Colombia: Central Bank keeps interest rate on hold in June

    June 29, 2018

    At its 29 June Board of Directors meeting, Colombia’s Central Bank (Banco de la República, BanRep) unanimously voted to maintain the benchmark interest rate at 4.25%, following a rate cut by 25 basis points at its last meeting held in April.

    Read more

  • Colombia:

    June 19, 2018

    The Fedesarollo consumer confidence index shot up to 8.9 points in May from 1.5 points in April, moving further above the zero-point threshold separating optimism from pessimism among consumers.

    Read more

  • Colombia: Industrial production records stellar expansion in April

    June 15, 2018

    According to data released by Colombia’s National Administrative Department of Statistics (DANE) on 15 June, industrial output expanded 10.5% over the same month of the previous year in April, contrasting a revised 1.2% year-on-year contraction in March (previously reported: -1.4% year-on-year). Looking at a breakdown of the data, 34 out of the 39 industrial activities recorded an upturn, while the remaining five categories registered a decline.

    Read more

More news

Search form