Central Bank continues to aggressively hike rates in March

The Bank hikes, as expected: On 31 March, the Central Bank of Colombia (Banrep) decided to hike by 100 basis points for the second consecutive meeting, bringing the policy rate to 11.25%. The move was not unanimous, but was in line with market expectations.

High inflation underpins the decision: The Central Bank’s move reflected the need to rein in inflation, which was above end-2025 levels and the 2.0–4.0% target in January–February, as well as elevated inflation expectations, which rose earlier this year following the government’s record minimum wage hike. The Bank also highlighted that the conflict in the Middle East poses upside risks to domestic inflation, as higher energy and fertilizer costs are likely to feed into broader price pressures. That said, it noted that the conflict could also improve the terms of trade, suggesting the overall effect on the economy is uncertain.

Banrep to hike further: The Central Bank did not provide specific forward guidance on future interest rate changes. That said, our panelists expect additional rate hikes ahead, with our Consensus for the policy rate to end this year close to a three-year high. The evolution of the U.S.-Iran conflict and its impact on Colombia’s economy are key to monitor.

Panelist insight: Commenting on the outlook, Alejandro Reyes González, analyst at BBVA, stated: “In our scenario, we expect an additional rate hike of approximately 100 basis points for the remainder of the year, which could occur at the April and June meetings (50 basis points at each). However, this path is contingent on the development of several factors: 1) the global environment and inflationary pressures stemming from higher energy prices; 2) the extent to which the minimum wage increase feeds into core inflation; 3) potential risks of food inflation via higher fertilizer prices or an El Niño phenomenon; among other factors.”

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 31 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.