Colombia | BanRep increased the monetary policy rate in September

By a majority, Colombia's central bank increased the interest rate by 25bp to 12.25%. The decision responds to the rebound in annual inflation to 6.2% in August and rising expectations, despite signs of a slowdown in economic activity and a weak labor market.

Key points

• Key points:
• August's annual inflation stood at 6.2%, with pressure from food and regulated prices. Services inflation reached 7.2%, and core inflation is at its highest level in the last year.
• Economic activity grew by 3.4% in the second quarter (seasonally adjusted). However, more recent data, such as the July ISE, along with industry and commerce records, show weakness.
• A deterioration is observed on the external front, associated with a more restrictive monetary policy in developed economies and the renewed increase in fuel prices, which puts pressure on the Colombian economy.
• The Minister of Finance confirmed the government's commitment to fiscal adjustment and recalled the three-phase plan, which includes a cut in 2026, the budget, and a rescue law.

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