Colombia's monetary authority raised its policy interest rate by 100 basis points on Friday, taking the benchmark to 10.25% in a move approved by a majority of the seven-member board. The increase marks the first upward adjustment to the country's key rate since April 2023.
The decision came as a surprise to many in the market. In a recent poll of 26 analysts, most respondents had forecast a 50 basis point rise, while two analysts had expected no change. The 100 basis point increase delivered by the central bank was therefore double the amount predicted by most participants in the surveyed group.
In explaining the larger-than-expected adjustment, the central bank pointed to two principal concerns: uncertainty surrounding public finances and an intensification of inflationary pressures. Those reasons were listed by officials as key factors informing the decision to tighten policy by a full percentage point rather than by a smaller increment.
This action represents a break from nearly three years of unchanged or easing policy and indicates a shift in the central bank's approach to monetary settings. The announcement and its rationale were made public following the board's vote, which was supported by a majority of its seven members.
Market participants and observers noted the unexpected size of the move relative to the consensus in the analyst poll. The gap between market expectations - where most forecast a 50 basis point increase - and the actual 100 basis point adjustment underscores the degree to which the central bank's assessment of risks differed from the views captured in the poll of 26 analysts.
Information provided by the central bank attributes the decision specifically to concerns around public finance uncertainty and burgeoning inflationary forces. The announcement did not elaborate further on sector-specific effects or outline additional policy steps beyond the rate increase itself.
Summary of the decision
- The policy rate was raised by 100 basis points to 10.25% on Friday.
- The vote was carried by a majority of the seven-member board.
- This is the first rate increase since April 2023 and marks a change in monetary policy direction.
The central bank's stated motivations and the divergence from market expectations were central to the announcement. The source material does not provide further detail on subsequent policy moves, sectoral impacts, or quantitative projections beyond the information summarized above.