Colombia Interest Rate

The Central Bank of Colombia kept its benchmark rate at 9.5% in March, with four directors supporting the decision and three favoring a 50bps cut. Annual inflation, after remaining stable at 5.2% for three months, increased slightly to 5.3% in February, with core inflation easing to 4.21%, driven by lower food processing and regulated prices, though service costs remained elevated at 7%. GDP expanded by 2.4% in Q4, and the ISE for January showed an annual change of 2.5%, with the technical team raising its growth forecast for 2025 from 2.6% to 2.8%. However, exchange rate volatility, stemming from tighter global financial conditions, a stronger dollar, and Colombia’s fiscal uncertainty, has raised inflationary risks, limiting room for aggressive rate cuts. The labor market continued to show strong records with rising employment and falling unemployment. The central bank emphasized that future rate decisions will depend on incoming economic data.