Analysts agree that the Banco de la República's Board will keep the interest rate at 9.25% in its October 31, 2025 meeting. This stems from persistent inflation and fiscal risks, despite the recent US Federal Reserve rate cut. Annual inflation hit 5.18% in September, above the 3% target.
Citi Research's survey, gathering views from 25 analysts at banks and think tanks, shows none expect a cut in the policy rate for the October meeting. Corficolombiana states the rate would remain unchanged for the fourth consecutive time, backed by a majority of four board members. Reasons include the "persistence of high inflation" and its expectations, fiscal deterioration, and economic performance, warranting cautious monetary policy.
Jackeline Piraján, chief economist at Scotiabank Colpatria, said: "we will probably have new information from the central bank's technical team. We are very expectant to see what risks they see, especially inflation with this expectation of how much the minimum wage might rise and also a bit the balance of what they see in the performance of the Colombian economy, which remains robust".
Bancolombia's analysis notes inflation rose to 5.18% annually in September, with December expectations at 5.2%, exceeding the 4% tolerance range. Pressures from price indexation in services and the minimum wage drive increases. Fiscal risks, such as activating the fiscal rule's escape clause until 2027, raise country risk and the exchange rate.
Despite the Federal Reserve's cut to a 3.75%-4% range, the Banco de la República prioritizes domestic risks. Caution is expected until late 2025, with potential cuts in the first quarter of 2026, per Valentina Guáqueta Sterling: "Caution will continue to prevail in the Board's decisions to promote a gradual convergence of inflation to the target amid an outlook with upside risks".
The market anticipates a divided vote, reflecting the issuer's conservative stance in an uncertain global environment.
