Colombia’s Rate Call: Consensus Says “Hold,” Data Says “Caution”

Economists surveyed by Reuters expect Colombia’s central bank to keep the policy rate at 9.25% at its September 30 meeting, extending a cautious stance after a pair of earlier holds defied forecasts for cuts.

That poll-based baseline anchors the outlook: easing is still on the table, but only if inflation keeps edging lower and fiscal risks don’t flare. Prices remain sticky enough to justify patience. Headline inflation rose to 5.10% year over year in August, with core near 5.3%.

Food inflation is running at 6.13%, and services categories such as restaurants and health remain above 5%, a sign that domestic pressures haven’t fully cooled.

Real-economy data also argue for restraint: July’s activity index grew 4.33% from a year earlier, led by services (roughly mid-5% growth) and industry (about 4%); primary sectors fell around 1.6%, reflecting softer oil, gas, and coal—momentum that leans on consumption more than exports or investment.

The fiscal backdrop is the swing factor. The central-government deficit for 2024 is around 6.7–6.8% of GDP and gross public debt near 61%. Authorities have activated the fiscal rule’s escape clause for 2025–2027, aiming to return to the rule in 2028.

Until plans and execution are clearer, markets will keep a close eye on financing, spreads, and the peso—variables that can quickly influence the board’s tolerance for cuts.

Politics add noise but not yet a pivot: the administration has signaled support for a sizable minimum-wage increase for 2026, though formal negotiations are still ahead.

Externally, the U.S. Federal Reserve’s mid-September rate cut eases global financial conditions at the margin, but it doesn’t erase Colombia-specific risk premia.

Bottom line: With consensus pointing to a hold now and gradual easing over 2025–2026, the bank is likely to keep real rates restrictive a bit longer.

A faster disinflation trend, a firmer peso, and clearer fiscal anchors would open the door to steadier cuts; any renewed inflation bump or fiscal slippage would keep the pause in place.