Colombia | BanRep kept the rate at 12.25% in its October meeting

By a majority, Colombia's central bank (BanRep) kept the interest rate at 12.25% in October. Among the main arguments they highlited a marginal acceleration in headline inflation but a moderation in core inflation and the weakening of economic activity indicators.

Key points

• Key points:
• Core inflation (excluding food and regulated items) slightly decreased from 6.1% to 6.0%, while two-year inflation expectations remain stable at around 4.0%.
• Economic activity shows a weakening for the third quarter, with lower consumption growth and weak performance from productive sectors.
• The El Niño phenomenon is a significant upside risk for food and regulated inflation, due to possible stress on the prices of perishable goods.
• Public finances and the Economic Rescue Law bill are a central factor for future monetary policy, and their passage through Congress will be key for upcoming rate decisions.
• The base scenario projects that interest rate stability will be maintained until September 2027, at which point a gradual reduction process would begin.

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