Colombia: Central Bank leaves rates unchanged in October
Bank holds fire: At its meeting on 31 October, the Central Bank of Colombia (Banrep) decided to keep the benchmark interest rate unchanged at 9.25%, matching market expectations. The Board of Directors was split: Four voted for the hold, two for a 50 basis point reduction and one for a 25 basis point decrease.
Above-target inflation and strong domestic demand drive the decision: The Central Bank’s decision was driven by above-target and rising inflation. Moreover, inflation expectations increased in the run-up to Banrep’s meeting, exceeding the 3.0% target for the next two years. Finally, Banrep deemed an interest rate cut unnecessary due to already strong domestic demand in the economy.
Easing cycle likely to resume in early 2026: The Central Bank provided no explicit forward guidance on future interest rate decisions. That said, our Consensus is for Banrep to ease monetary policy again from Q1 2026.
Panelist insight: Commenting on the outlook, Itaú Unibanco analysts stated:
“The rebound in inflation, de-anchoring of inflation expectations, strength of domestic demand, and persistent fiscal imbalances limit the room for monetary policy easing. We anticipate that BanRep will keep the policy rate unchanged at 9.25%, at least until the 2H26.”