Colombia’s central bank is widely expected to raise its benchmark interest rate by 50 basis points to 12.50% on July 31, marking the culmination of Governor Germán Ávila’s tenure.
The anticipated move represents the latest step in an aggressive tightening cycle designed to rein in persistent price pressures that have defied earlier stabilization efforts.
14% in June, surpassing all market forecasts and reaching its highest level in approximately two years.
The forecasted hike follows a July 1 decision that lifted the policy rate to 12%, a move that was already viewed as a significant escalation in the bank’s fight against inflation. Market participants are now pricing in a further 50-basis-point increase, reflecting concerns that the current stance may still be insufficient to anchor expectations.
Inflation data has provided little relief for policymakers.
Colombia’s annual inflation rate accelerated to 6.14% in June, surpassing all market forecasts and reaching its highest level in approximately two years.
This acceleration underscores the depth of the price pressures facing the economy and validates the central bank’s hawkish trajectory.