FXStreet reported that Standard Chartered research economist Dan Pan expects Colombia’s central bank to raise rates again Oct. 30, as inflation remains above target and board members warn about economic costs.
Pan expects a 25-basis-point move to be the cycle’s last, citing persistent price pressure, elevated expectations and risks from oil and El Niño, FXStreet reported Oct. 21. He also cautioned that higher rates could strengthen the peso and encourage imports, worsening Colombia’s external balance, the outlet reported.
The policy rate is 12.25% after the board raised it by 25 basis points on Sept. 30, effective Oct. 1. Four members supported that increase, two favored holding rates and one backed a 50-basis-point rise.
Colombia’s National Administrative Department of Statistics (DANE) reported that consumer prices rose 6.29% year over year in September, up from 5.18% a year earlier. The central bank’s inflation target is 3%. Its September survey showed analysts expected inflation of 6.8% at the end of 2026 and 4.0% two years ahead.
The central bank’s September minutes said domestic demand exceeded output. Seasonally adjusted gross domestic product grew 3.4% year over year in the second quarter, while the Economic Monitoring Indicator rose 1.1% in July, down from 3.5% in June. The minutes also warned that El Niño could push up food and regulated prices. The National Oceanic and Atmospheric Administration’s Oct. 8 outlook put the probability of a strong-to-very-strong El Niño through January-March 2027 above 83%.
Members who supported September’s increase said controlling inflation supports saving and private investment. Those opposing it warned that tighter policy could weaken output, investment and credit. They said vulnerable people needing credit and investment for earthquake reconstruction could be disproportionately affected, as could people facing El Niño-related food insecurity and poverty.
The board held the rate at 12.0% in July by a 4-3 vote. Members who favored holding rates cited peso appreciation and warned that a wider rate differential could encourage carry trades. The bank’s next policy-rate decision is scheduled for Oct. 30.
