Only towards the end of the first semester of 2027 inflation in Colombia would reach the goal of 3%said the General Manager of the Bank of the Republic, Leonardo Villarat the end of the session in which it was decided to maintain the interest rate at 9.25%.
Four directors voted in favor of this decision, two for a reduction of 50 basic points (PB) and one for a 25 bp cut.
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Villar said that total inflation in August stood at 5.1% and basic inflation without food or regulated in 4.8%exceeding the forecasts of the technical team. The new prognosis scenario suggests a slower convergence towards the 3%goal.
Inflation.
The inflation expectations of analysts have been increasing, and according to the results of the September survey, 5% and 4% were located in the median by 2025 and 2026, respectively. The expectations extracted from public debt markets remain above the 3% goal.
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He also said that economic activity grew 2.5% in the second quarter of the year, in line with what was expected by the technical team. This growth reflects the good dynamism of domestic demand, with sustained increases in recent consumption and growth in investment, especially in civil and machinery and equipment.
For Villar, external financial conditions have become more loose in recent weeks. Uncertainty persists on the effects of the commercial policy of USA and geopolitical, regional and global tensions.
Inflation
The manager of the Colombian Central Bank also added that the decision adopted by the majority of the members of 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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In addition, he warned that future interest rate movements will respond to the Evolution of inflation and its expectations, the dynamics of economic activity, and the balance of internal and external risks.
For its part, the Minister of Finance, Germán Ávila Plazasexpressed his disagreement with not reducing the rate and recalled that during the year a small reduction of 25 basic points has been made last April, “which shows a conservative position, which does not accompany the economy of the country and the government’s desire to stimulate growth and downward activation of reference rate”
The indicators are stable
He said that macro indicators are favorable such as unemployment and inflation, which nevertheless had a small upward variation, the exchange rate appreciating and estimated economic growth of 2.5% and stability in indicators “And that stability must be stimulated with the rate to have more growth”
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He commented that the non -adoption of policies that stimulate growth affect the capacity of the State against the uncertainties that are appreciated in the international and regional geopolitics and in the United States with commercial policies and that is why the economy must be strengthened and that opinion was not attended by four members of the Board of Directors of the issuer ”And that is why our disagreement and that is why there must be an effort in rate for the country’s reactivation”
Villar said that inflation has dropped in the last two years and manifested in 2023 and 2024 and has stopped doing it in 2025. “Since November 2024 it is almost at the same level, in 2026 it returns to the decline and towards the end of the first semester of 2027 the goal of 3% would be seen“
Holman Rodríguez Martínez
Portfolio journalist
