Policy Interest Rate in Colombia
The Central Bank's policy rates over the last decade saw alternating hiking and lowering cycles. Post-financial crisis, rates trended upward to tackle climbing inflation. However, in response to the COVID-19 pandemic, rates were quickly cut to support the economy and the peso. In the face of rising inflation, the Bank initiated a series of rate hikes in 2022. By 2024, the Bank eased its stance, but rates remained elevated by pre-pandemic standards.
The policy interest rate ended 2024 at 9.50%, compared to the end-2023 value of 13.00% and the figure a decade earlier of 4.50%. It averaged 6.39% over the last decade. For more interest rate information, visit our dedicated page.
Colombia Interest Rate Chart
Note: This chart displays Policy Interest Rate (%) for Colombia from 2024 to 2023.
Source: Macrobond.
Colombia Interest Rate Data
2019 | 2020 | 2021 | 2022 | 2023 | |
---|---|---|---|---|---|
Policy Interest Rate (%, eop) | 4.25 | 1.75 | 3.00 | 12.00 | 13.00 |
90-day DTF (%, eop) | 4.48 | 1.89 | 3.21 | 13.70 | 12.69 |
10-Year Bond Yield (%, eop) | 6.42 | 5.76 | 8.46 | 13.23 | 9.94 |
Central Bank continues monetary easing in October
Cut meets market expectations: At its meeting on 31 October, the Board of Directors of the Central Bank of Colombia (Banrep) decided to reduce the policy interest rate by 50 basis points to 9.75%. The move, which mirrored September’s same-sized cut, had been largely priced in by markets and was once again not unanimous; three of the Board’s seven members preferred a 75 basis point cut.
Banrep aims to support the economy amid declining inflation: Banrep aimed to support the ongoing recovery in economic activity, likely motivated by Q2’s nearly stagnant quarterly GDP growth. A continued decrease in inflation and inflation expectations likely added extra impetus to the decision; price pressures fell to a near three-year low of 5.8% in September. That said, persistent upside inflationary risks stemming from a weakening currency likely dissuaded a larger-sized cut.
Further easing likely by end-2025: In its communiqué, Banrep provided no explicit forward guidance but underlined its commitment to “support the recovery of economic growth while maintaining the necessary prudence considering persistent risks to the inflation outlook”; the Bank’s main priority is to drive inflation towards its 3.0% target by 2025. That said, the Bank struck a more hawkish tone than in its last meeting, hinting that further monetary policy easing would hinge on the performance of the currency, which has recently come under strain amid a strong USD, declining oil prices and a rising fiscal shortfall in Colombia weighing on investor sentiment. Our Consensus is for a 75 basis point cut at the final meeting of 2024 on 20 December; our panel then expects Banrep to ease its stance by a further three percentage points next year.
Panelist insight: Scotiabank Colpatria analysts commented: “The next meeting will be on Friday, December 20; the split vote 4 vs 3 suggests there is a chance to accelerate the easing cycle. However, it will strongly depend on having a better clarity of the international scenario, the negotiation of the minimum salary, and fiscal initiatives. Our call remains for a 75 bps rate cut to close the year at 9%. The terminal […] rate is still estimated for now at 5.50%; however, if we observe a permanent shock in risk premiums, we could consider a moderate upside revision in the future.” Goldman Sachs’ Santiago Tellez was slightly more hawkish: “We maintain our base case of another 50bp cut in December on the back of today’s policy signals and our expectation of slow progress on core inflation, firmer growth in Q3, and lingering domestic risks, but we do not rule out a larger 75bp move given the slim hawkish majority.”
How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Colombian interest rate projections for the next ten years from a panel of 37 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Colombian interest rate.
Download one of our sample reports to visualize what a Consensus Forecast is and see our Colombian interest rate projections.
Want to get access to the full dataset of Colombian interest rate forecasts? Send an email to info@focus-economics.com.
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