Colombia | BanRep raises rates by 75bps to 12.0% in June

Summary

Banco de la República raised its policy rate by 75 basis points to 12.0%. The decision was split, with four Board members voting in favor of the increase, two supporting a 50-basis-point rate cut, and one voting to keep the policy rate unchanged

Key points

• Key points:
• BanRep highlighted that inflation continues to follow an upward trajectory, both in headline and core measures, with headline inflation reaching 5.8% year-over-year in May.
• Inflation expectations remain elevated and above the 3.0% inflation target across all forecast horizons. The Board also pointed to upside inflation risks, including the possibility of a strong or very strong El Niño weather event.
• Economic activity remains resilient, with domestic demand—and particularly private consumption—continuing to outpace GDP growth. At the same time, the labor market remains robust, supported by historically low unemployment rates and solid wage growth.
• External uncertainty remains elevated, reflecting both geopolitical developments and monetary policy decisions in advanced economies.
• The Minister of Finance stated that the government is likely to submit a Financing Law to the newly installed Congress (beginning July 20), although no further details were provided.

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