In its May 1, 2026 board meeting, Banco de la República unanimously kept the benchmark interest rate at 11.25%, surprising analysts expecting a hike to combat accelerating inflation. Finance Minister Germán Ávila participated fully, citing constructive dialogue, while board members justified the decision to maintain stability amid political pressures.
Banco de la República, Colombia's central bank, held its key interest rate steady at 11.25% during its May 1, 2026 Monetary Policy Board meeting—the third of the year—following two prior 100 basis point hikes from 9.25% at the start of 2026. The unanimous decision surprised markets, with analysts from Anif and Citi projecting a 50-75 basis point increase to 11.75%-12% to address inflation, which hit 5.6% last month, the highest since 2024.
General Manager Leonardo Villar announced the decision, noting a strong labor market with low unemployment and rising salaried employment, plus adjusted inflation expectations. "Today's decision aligns with the message given last month," Villar stated. Codirector Mauricio Villamizar added in a written message: “From a strictly technical point of view, one could argue that a different calibration of monetary policy would have been preferable,” but emphasized preserving institutional stability and avoiding uncertainty amid government pressures.
Finance Minister Germán Ávila, who chairs the meetings, attended the full session—unlike his early exit in March—describing it as "constructive" with potential for consensus. He reiterated calls for rate cuts to aid recovery, criticizing prior hikes for favoring the financial sector. Tensions had escalated with President Gustavo Petro threatening further minimum wage hikes if rates rose again, though Ávila welcomed the debate as a signal of possible agreements.
Villamizar warned the pause might necessitate more aggressive future adjustments to meet the 3% inflation target. Economist Jayati Ghosh from the University of Massachusetts Amherst questioned hikes for supply-driven inflation like high oil prices: “Raising rates does not help; it only reduces people's real income and makes credit more expensive.” The bank will meet again on June 30.
