Policy Interest Rate in Colombia
Throughout 2013-2022, Colombia's central bank adjusted policy rates in response to economic fluctuations and inflation. In the early years, rates were increased to control inflation and stabilize the peso. However, in response to the 2020 pandemic, rates were significantly reduced to historic lows to support economic growth. By 2022, with economic recovery underway and inflationary pressures mounting, the central bank began increasing rates.
The policy interest rate ended 2022 at 12.00%, up from the 3.00% end-2021 value and significantly up from the reading of 3.25% a decade earlier. For reference, the average policy rate in Latin America was 18.90% at end-2022. For more interest rate information, visit our dedicated page.
Colombia Interest Rate Chart
Colombia Interest Rate Data
2018 | 2019 | 2020 | 2021 | 2022 | |
---|---|---|---|---|---|
Policy Interest Rate (%, eop) | 4.25 | 4.25 | 1.75 | 3.00 | 12.00 |
90-day DTF (%, eop) | 4.54 | 4.48 | 1.89 | 3.21 | 13.70 |
10-Year Bond Yield (%, eop) | 7.02 | 6.42 | 5.76 | 8.46 | 13.23 |
Central Bank cuts rates further in January
At its 31 January meeting, the Board of Directors of the Central Bank of Colombia (BanRep) delivered another 25 basis point cut, bringing the benchmark interest rate down to 12.75%. The decision, which followed December’s same-sized cut, was not unanimous: Two of the seven Board members preferred a 50 basis point reduction. Similarly, markets had priced in a larger cut.
The move was driven by headline inflation’s continued moderation through December from its peak in March 2023. Similarly, inflation expectations fell. Additionally, BanRep aimed to support the economy as it has penciled in a shallow 0.8% GDP expansion for 2024. That said, the Bank opted for a smaller-than-expected reduction as inflation remained over three times above BanRep’s 3.0% target.
BanRep’s communiqué was void of explicit forward guidance. That said, the Bank expects the cut to be consistent with headline inflation converging to target by H1 2025. BanRep acknowledged, however, that risks to the inflationary outlook remain skewed to the upside and include the higher-than-anticipated recent 12% minimum wage increase and the impact of the El Niño weather pattern on commodity prices, especially for agricultural commodities. All of our panelists see further monetary easing this year, although the spread is wide: Between 275–575 basis points worth of additional cuts have been penciled in. The Bank’s next meeting is scheduled for 22 March.
How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Colombian interest rate projections for the next ten years from a panel of 34 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Colombian interest rate.
Download one of our sample reports to visualize what a Consensus Forecast is and see our Colombian interest rate projections.
Want to get access to the full dataset of Colombian interest rate forecasts? Send an email to info@focus-economics.com.
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