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Colombia Interest Rate

Colombia Interest Rate

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

Note: This chart displays Policy Interest Rate (%) for Colombia from 2014 to 2023.
Source: Central Bank of Colombia.

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 again in April

At its meeting on 30 April, the Board of Directors of the Central Bank of Colombia (Banrep) decided to cut the benchmark policy interest rate by 50 basis points to 11.75%. The decision, which mirrored March’s same-sized cut, was once again not unanimous: One of the seven members preferred a 75 basis point cut, and another a 100 basis point reduction. The move had been largely priced in by markets.

The decision was motivated by a continued reduction in both headline and core inflation, which fell to 7.4% and 6.8% in March, respectively. In particular, the Bank noted receding price pressures for goods and food. Regarding activity, Banrep increased its economic growth projection for 2024 to 1.4% from 1.1% and forecast a 3.2% expansion in 2025, which gave the Bank further room to continue its monetary policy loosening cycle. Meanwhile, the Bank noted a slight increase in the seasonally adjusted unemployment rate in February.

In it communique, the Central Bank reaffirmed its commitment to cut rates to boost growth ahead. In line with this, all of our panelists expect additional rate cuts by year-end, although the spread remains wide at 100–575 basis points worth of further reductions by year-end. The Bank’s next meeting is scheduled for 28 June.

Goldman Sachs’ Santiago Tellez spoke about the outlook for rates ahead: “We view the overall tone of the minutes and the updated staff’s forecasts in the April QIR as consistent with the continuation of the cautious cutting cycle. Our baseline scenario remains that the MPC will deliver 50bp rate cuts in upcoming meetings.”

Consensus Forecasts and Projections for the next ten years

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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