FX.co ★ Colombia Central Bank Rises Interest Rates in June

At its June 30 meeting, the Central Bank of Colombia raised its benchmark interest rate by 75 basis points to 12%, tightening monetary policy in response to mounting inflationary pressures. Policymakers highlighted that inflation continued to accelerate, with headline inflation reaching 5.8% in May and core inflation climbing to 6.0%, both moving further away from the bank’s 3% target. Although inflation expectations eased slightly in June, they remained elevated across all time horizons.

Economic activity remained robust. GDP expanded by 2.2% year-on-year in the first quarter, up from 2.0% in the previous quarter, while domestic demand continued to grow faster than overall output. The labor market also showed strength, with the unemployment rate at a historically low 8.0% in May and wages posting solid gains.

According to the board, the rate increase is intended to guide inflation back onto a downward trajectory. Future monetary policy decisions, they emphasized, will be driven by incoming economic data and the evolution of external risks.