Heteronomics Archive

April 30, 2025

Colombia: 25bp Rate Cut To 9.25% (Consensus 9.5%) in Apr-25

Banco de la República unanimously cut its benchmark rate by 25bps to 9.25%, surprising consensus expectations for no change and breaking a recent streak of unexpected holds.
Inflation resumed its downward path, with core and headline figures easing and market-based expectations declining, supporting a measured policy loosening stance.
While domestic demand remains resilient and growth forecasts have been upgraded, external financing conditions and fiscal uncertainty continue to pose constraints on the pace of further easing.

March 31, 2025

Banco de la República held the policy rate steady at 9.5%, surprising consensus expectations for a 25bp cut, as most board members prioritised caution amid rising inflation and external uncertainty.
Headline inflation rose slightly to 5.3% in February, with persistent pressures in regulated and food prices, while inflation expectations remained above target across market-based and survey measures.
With the labour market exhibiting strength, and fiscal and global risks still elevated, the central bank has delayed further rate cuts until more conclusive data becomes available.

December 20, 2024

Banco de la República reduced the benchmark rate by 25bps to 9.50%, undershooting market expectations of a 50bp cut due to concerns over persistent inflation and exchange rate volatility.
While headline inflation fell to 5.2% in November, stable core inflation and peso depreciation constrain BanRep’s scope for faster rate cuts, as imported inflation risks remain significant.
Robust Q3 GDP growth and a resilient labour market support gradual monetary easing; however, heightened external financial pressures and fiscal uncertainties will heavily influence future policy decisions.

October 31, 2024

Banco de la República reduced its policy rate by 50bps to 9.75%, continuing its easing cycle, although three members preferred a more aggressive 75bps cut.
Inflation has moderated to 5.8%, yet core inflation at 5.5% and a weakening peso signal caution in future rate cuts, as imported inflation risks could limit BanRep’s flexibility.
Colombia’s upwardly revised growth projections contrast fiscal and exchange rate pressures, which BanRep indicates will be critical in assessing the pace of additional easing.