While the Board of Directors of the Bank of the Republic He decided by majority to keep the monetary policy interest rate in 9.25%, the Minister of Finance, Germán Ávilaanticipated an increase (although he did not say how much) of the minimum wage in 2026, that he continues to recover purchasing capacity in real terms.
Four directors of the issuer voted in favor of this decision, two for a reduction of 50 basic points (PB) and one did it for a 25 bp cut.
Leonardo Villar Gómez, manager of the Bank of the RepublicHe said that annual inflation in June was reduced to 4.8% compared to 5.1% in May, thanks to a reduction in food and regulated inflation, especially electrical energy.
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Minimum wage
However, he warned that basic inflation (without food or regulated) stabilized in 4.8%, interrupting its descending trend.
So, Inflation expectations are maintained above the goalwith stable behavior for those of analysts and mixed for those from public debt markets.
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He mentioned that the Economy monitoring index (ISE)In May, an annual variation of 2.7% led by tertiary activities presented.
“The technical team estimates that in the second quarter economic activity would grow at an annual rate of 2.7%, marked by internal demand that would grow 4.1%”Villar said.
Leonardo Villar, manager Banco de la República.
In addition, he considered that the country’s external financing conditions face a complex environment, from global commercial tensions, high uncertainty for conflicts in several regions of the world, and slow expected normalization of monetary policy in the United States.
For the general manager of the Colombian Central Bank, the decision adopted by the Board of Directors maintains a cautious position of monetary policy that recognizes the identified risks about the convergence of inflation to the goal.
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He also said that future interest rate movements will respond toto evolution of inflation and their expectations, the dynamics of economic activity, and the balance of internal and external risks.
Government, dissatisfied
He Minister of Finance and Public Credit, Germán Ávila PlazasHe said that the government disagrees and uncomfortable for the decision of four members of the Board of the issuer to keep the rate in 9.25%unchanged.
He assured that proposed a reduction to address the dynamics of the economy and based on the significant inflation decline up to 4.82% in annual terms in Junea decline compared to preceding months and an expectation of 4.5% for the closure of 2025.
(Also read: Analysis: Colombia progresses slowly in the mission of reducing monetary poverty).
He warned that the real interest rate is 4.6% (by discounting the issuer rate and inflation) two points above that expected by the Bank of the Republic. Therefore, he considered that the rate should be lowered in the next meetings.
Germán Ávila, Minister of Finance and Public Credit
It must be remembered that in the remainder of 2025 there are only three boards of directors in which they could make a decision in the field of interest rates: September, October and December.
For the minister, the need to reduce the rate impacts this juncture in a greater growth of the economy that goes by 2.7% and should be higher, while those who did not share the government’s approach “”They are not careful with the manufacturing sector, because signs had to be given that a decrease in the active rate more said sector”
“We must continue making efforts to lower the rates in microcredit and popular economy and a good signal would have been a decline in the issuer’s rate”Said Ávila.
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He called on the board of directors of the issuer to be rethinking at the next meeting, since there are already few opportunities to reach the reference objectives.
Leonardo Villar said that As of 2025, the inflation expectation is between 4.7 to 4.8% And that implies that there would be no important casualties, but that this decrease will really be made in 2026.
Bank of the Republic
Minimum rise
The Minister of Finance recalled that the increases in the minimum wage in the last three years have been sustained and although they are considered to impact inflation and unemployment, they show that inflation and unemployment remain descending.
“The expectation of 3.2% of inflation variation by 2026 considers the increase in the minimum wage, but in the perspective of President Gustavo Petro, the idea of making the real increase with the criteria that they have reduced the poverty indicators, an element that is redistributive, is going to be maintained, since the work is generating value and does not generate unemployment or inflation”, Said Ávila Plazas.
“It will be a decision to maintain the dynamics of making increases in the real minimum wage, and that is foreseen in the inflation goal”Said the minister.
Villar, in allusion of words from President Gustavo Petrothat the issuer wants to damage the economy, he said that the decisions made are with technical criteria.
Holman Rodríguez Martínez
Portfolio journalist
