Colombia’s central bank raised its policy rate to 12.25% on September 30 as unemployment reached 9.4% in August, above the 8.1% forecast. The increase from 12% surprised markets, even as the peso firmed.
A decision against market expectations
Banco de la República’s seven-member board voted 4-2-1 for the 25-basis-point increase. Four directors backed the move, two wanted to hold the rate, and one favored a larger 50-basis-point increase. The rate had stood at 12% since July 1, after a 75-basis-point increase in late June. Cumulative tightening for the year stood at 300 basis points.
Markets had expected no change. The August Encuesta de Opinión Financiera, a Fedesarrollo and stock-exchange survey used as a market reference, showed analysts expected the rate to stay at 12% through year-end. The board paused in July to assess whether earlier increases were working, and it hadn’t signaled a September 30 move publicly.
The board cited persistent inflation. Annual inflation reached 6.2% in August, or 6.24% in DANE’s unrounded figure, up from 6.1% in June and above the 2-to-4-percent target range. Services inflation stood at 7.2%, while inflation expectations remained above target at all horizons. The board’s minutes, scheduled for Monday, October 5, are expected to give its full reasoning.
Households and borrowers face the rate’s effects
Higher policy rates can feed into new peso loans through the DTF and IBR indexes, while variable-rate credit may respond later. Term deposits and savings products tend to follow the policy rate upward. Reports advised borrowers to recheck loan offers and savers to compare rates before renewing deposits.
The unemployment rate reached 9.4% in August, up from 8.6% in the comparison reported by the source and above the 8.1% forecast. The rate increase therefore landed alongside weaker-than-expected employment data, though the board’s published reasoning focused on inflation.
The Superfinanciera certified the peso’s official reference rate, the TRM, at 3,312.84 pesos per dollar for Thursday, October 1, compared with 3,341.23 on Wednesday and 3,349.63 on Tuesday. At that rate, US$1,000 converted to COP 3,312,840, and rent of COP 3,000,000 equaled about US$906.
One market report said the peso firmed 0.68% to 3,307.50 per dollar, while another reported the same peso move and a 0.38% fall in the COLCAP to 2,549 points. A cross-market board listed the COLCAP at 2,549.16, down 0.38%, and USD/COP at 3,140, up 0.03%; a separate market table gave USD/COP at 3,307.50, down 0.68%. The reports said dollar earners received fewer pesos per transfer as the peso strengthened, while people earning pesos with dollar obligations got relief. US$1,000 converted to about COP 37,000 less than at Tuesday’s rate.
Government finances and outside discussions
Finance Minister Miguel Gómez said the board concluded “a moderate 25-basis-point increase in the interest rate was the best policy.” It was his first rate decision. The government also began early talks with the IMF after the president opened discussions on Sunday, and it requested a technical mission while discussing possible financing.
Bogotá’s new tax reform, valued at about US$324 million a year, moved into implementation. The fiscal-rule committee, Carf, projected a 2026 deficit of 7.8% of GDP, above the government’s 7.2% projection. The board’s next rate meeting was scheduled for October 30, 2026.