Colombia central bank sees inflation approaching 3% target by mid-2028

Colombia's central bank chief, Leonardo Villar, has stated that inflation in the country is expected to approach the 3% target by mid-2028, according to Reuters. The bank's models indicate that inflation rose to 4.3% at the end of 2027, a significant increase from the previous projection of 3.7%. This comes despite the Central Bank's quarterly monetary policy report, which shows that Colombia has struggled to meet its inflation target since 2021.

As of July, annual inflation stood at 6.03%. Speaking at a banking conference in Cartagena, Villar attributed the upward pressure on prices to domestic demand growth, which has exceeded domestic production growth. Colombia's Vice-Minister of Finance, Juan Sebastian Betancur, also addressed the issue, stating that returning to compliance with the country's fiscal rule in the short term seems unlikely due to the deterioration of public finances.

The fiscal rule, introduced in Colombia in 2011, sets limits on government spending and borrowing to ensure medium and long-term fiscal sustainability and macroeconomic stability. However, the government suspended compliance with the rule in June 2025 for a three-year period. Betancur emphasized the importance of a medium-term fiscal anchor, expressing his team's ongoing efforts towards that goal.