Colombia Central Bank Minutes Reveal 4-2-1 Rate Split
BanRep's minutes reveal a divided board: inflation fears won a narrow majority for a 12.25% rate, while two directors warned about the cost to growth. The post Colombia Central Bank Minutes Reveal 4-2-1 Rate Split appeared first on The Rio Times .
On 5 October, Colombia's central bank published minutes revealing they came close to a larger rate hike. One director proposed a 50-basis-point increase, while another reduced that demand to secure a majority. The Banco de la República, or BanRep, raised its policy rate by 25 basis points to 12.25% on Wednesday 30 September, with the new rate applying since Thursday 1 October.
The move surprised most analysts, as 16 out of 22 had expected no change. BanRep's seven-member board includes the finance minister, Miguel Gómez, and the governor, Leonardo Villar. Gómez has stated he voted for the rate rise. Four directors voted for the 25-point rise, citing headline inflation climbing more than double the 3% target.
Core inflation, excluding food and regulated prices, rose to 6.1% in August, its highest level since June 2024. The majority warned that inflation could rise further, citing El Niño and higher oil and farm input prices. Analysts in BanRep's September survey expect 6.8% inflation at the end of 2026, with expectations remaining unanchored from the 3% target.
The majority believed the economy is running hotter than its capacity, with domestic demand growing faster than output. The board also noted that recent rate rises in developed economies reduce investors' appetite for risk, which could raise Colombia's risk premium and reverse the peso's gains.
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