Colombia's central bank raises policy rate to 12% amid rising inflation

The Board of Directors of the Banco de la República voted 4‑2‑1 to increase the benchmark policy rate by 75 basis points, taking it to 12% – the highest level since April 2024. The move responds to inflation that remains well above the 3% target, with total annual CPI at 5.8% and core inflation (excluding food and regulated items) at 6.0% in May.

The Board highlighted strong economic activity, noting GDP grew 2.2% in Q1 2026 and unemployment fell to 8%, but argued that persistent price pressures and external risks – notably the conflict in the Middle East – require tighter monetary policy.

President Gustavo Petro publicly criticized the hike, warning that higher borrowing costs could stall the recent job creation and raise debt servicing for households and firms.

Analysts expect the rate increase will raise loan and credit-card costs, while potentially boosting returns on savings. The central bank signalled that further moves will depend on inflation expectations and external developments.