Colombia’s central bank raises key rate to 12.25% — The Rio Times

Colombia’s central bank, Banco de la República, raised its key interest rate from 12% to 12.25%. The decision was announced on September 30, 2026, and the new rate took effect on October 1, The Rio Times reports.

Four of the bank’s seven board members voted for the 0.25-percentage-point increase. Two supported keeping the rate unchanged, while one favored an immediate 0.5-percentage-point increase. Central bank Governor Leonardo Villar cited price dynamics as one of the main reasons for the decision.

Inflation exceeds target

Annual inflation in Colombia stood at 6.2% in August, compared with the central bank’s 3% target. Food prices rose by 6.1%, regulated prices by 6.8%, and services by 7.2%. Core inflation, which excludes food and regulated prices, was also 6.1%.

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Analysts surveyed by the bank expect inflation to reach 6.8% by the end of 2026. The board also pointed to the risk of higher food prices due to the El Niño weather phenomenon and tighter global financial conditions.

Economic indicators

In the second quarter of 2026, Colombia’s economy grew by 3.4% year-on-year, adjusted for seasonal fluctuations. At the same time, the economic activity indicator rose by 1.1% in July compared with the same month last year, while industrial production declined by 2.3%.

Retail sales increased by 5.3% in July, while imports in dollar terms rose by 22.3%. Since the start of 2026, the country’s key rate has increased by three percentage points, from 9.25% at the end of 2025.