Heteronomics Archive

July 31, 2025

Colombia: Hawkish Policy Pivot

Colombian rate held at 9.25% contrary to consensus, with the Board prioritising persistent core inflation over growth concerns in a split 4-3 decision.
Fiscal deterioration following S&P/Moody's downgrades constrains monetary easing through sovereign risk premium transmission.
Robust domestic demand growth of 4.1% and sticky services inflation justify a restrictive stance despite headline disinflation to 4.8%.

April 30, 2025

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.