Bank of the Republic raises interest rates to 11.25%, defends decision and denies favoring the financial sector
The board of directors of the Bank of the Republic resolved to increase the monetary policy interest rate by 100 basis points, bringing it to 11.25%...
TL;DR
- The Bank of the Republic's board voted to raise the monetary policy interest rate by 100 basis points to 11.25%.
- This decision aims to ensure inflation returns to a downward trajectory and converges towards the medium-term target.
- Annual inflation was 5.3% in February, above the 5.0% recorded at the end of 2025.
- Core inflation also increased, indicating persistent price pressures.
- Inflation expectations remain elevated, though showing marginal reductions.
- Economic activity showed moderate growth, with GDP increasing by 2.2% in Q4 2025 and 2.6% for the full year.
- Governor Leonardo Villar defended the rate hike, asserting the board's independence and technical basis for decisions.
- Villar denied that rate increases benefit the financial sector, citing previous periods where the sector was negatively impacted.
- The primary constitutional mandate of the bank is to maintain the purchasing power of the currency.
- International factors, such as the war in Iran, are considered risks to global economic stability and could have mixed effects on Colombia.
- Future monetary policy decisions will depend on evolving economic data and the international context.
- The attendance of the Minister of Finance at board meetings is a legal and constitutional obligation.