Colombia Central Bank Raises Interest Rates in June

The Central Bank of Colombia raised its benchmark interest rate by 75 basis points to 12% at its June 30 meeting, tightening policy as inflationary pressures intensified.Policymakers noted that inflation continued to accelerate, with headline inflation reaching 5.8% in May and core inflation rising…

The Central Bank of Colombia raised its benchmark interest rate by 75 basis points to 12% at its June 30 meeting, tightening policy as inflationary pressures intensified.

Policymakers noted that inflation continued to accelerate, with headline inflation reaching 5.8% in May and core inflation rising to 6.0%, moving further away from the bank’s 3% target.

Inflation expectations also remained elevated across all horizons despite some easing in June.

Economic activity showed resilience, with GDP growth accelerating to 2.2% year-on-year in the first quarter, above the 2.0% expansion in the previous quarter, while domestic demand continued to outpace output.

The labor market also remained strong, with unemployment at a historically low 8.0% in May and wages rising significantly.

The board said the rate hike aims to steer inflation back onto a downward path, while future policy decisions will depend on incoming data and evolving external risks.