Since the afternoon of Thursday, July 31, almost all private, public, academic, banks and even international entities, The Board of Directors of the Bank of the Republic left its monetary policy rate in 9.25%.
(Read: Bank of the Republic decided to maintain the interest rate at 9.25%).
This surprised more than 80% of the analysts said in the surveys that 25 basic points (PB) would be lowered.
The decision, according to the issuer, was based on the uncertainty about the complexity of external financing conditions, the high uncertainty derived from commercial tensions and the slow expected normalization of monetary policy in the US.
The vote replicated the June pattern, With four co -director who voted in favor of maintain.
The Board acknowledged that inflation continues on a deceleration path, in line with the minimum registered since 2021 in June.
(See: Interest rates: Petro criticizes Banrep’s decision to leave them still for August).
For its part, The short -term inflation expectations remained stable compared to June, although they continue well above the upper limit of the emitter tolerance range. The annual inflation expectation for December this year is 4.8%, as well as the previous month, while 12 months expectations increased up to 3.90%. In turn, the expected inflation for December 2026 increased up to 3.8%.
For Laura Clavijo, director of Economic, Sector and Market Research of Bancolombia, despite not being explicit on this occasion, the issuer has been warning about the impact of the fiscal situation on monetary policy decisions.
The analyst says that “The publication of the General Budget of the Nation by 2026, reinforced the ghost of the local fiscal uncertainty. The minhare proposal includes a growth of 6.5% compared to 2025, which implies a total amount of $ 556.9 billion. The calculations presented show an increase in primary expenditure, based on an alleged of lower payment of interest and higher income”.
Interest rates.
Istock
High rate at the end of the year
Ensures that this decision “Skewer the interest rate of the year, even above 8.50%. Alcista pressures on the convergence of inflation to the goal – aument of the minimum wage, increased expectations of inflation, fiscal uncertainty and tight global financial conditions – are the main arguments that will continue to determine future decisions”.
An analysis of Skandia ensures that in the face of the third quarter, the behavior of interest rates will be decisive. “At least two additional cuts are planned by the Bank of the Republic before the end of the year, in line with inflation that could approach 4.7%”.
Alejandro Reyes González, from BBVA Research, said “The decision and message of the Bank Board was more restrictive than observed in previous months, even in the absence of tax mentions. What materializes the bias we had at lower rates reductions in the remainder of 2025”.
(Here: Minhacienda comments on the minimum advance the debate. What to expect?).
According to economic investigations of the Bank of Bogotá, there is a high indexation of leases and some resistance to the decline in services, What would lead to a practically lateral trend of inflation in the remainder of the year, which will cause the technical team to review its projected inflation path by 2025, currently in 4.4%.
A underlying budget, supposed optimistic income, a tax reform in times of political polarization, expansion of the expenditure and recurring change of the tax cases, are sufficient reasons that limit the space for reduction of the interest rate, the bank said.
Holman Rodríguez Martínez
Portfolio writing
