The Board of Directors of the Banco de la República voted by majority to keep the policy interest rate at 9.25% in its final meeting of the year, amid ongoing inflationary pressures above 5%. Two members, including Finance Minister Germán Ávila, favored a 50 basis point cut. Inflation eased slightly to 5.3% in November, but future expectations rose.
The Board of Directors of the Banco de la República, in its December 19, 2025 meeting, adopted a cautious stance by keeping the interest rate at 9.25%, thus closing the year unchanged and entering 2026 at the same level. The decision passed with four votes in favor and two against a 50 basis point cut, pushed by Finance Minister Germán Ávila, while another member proposed a 25 basis point reduction. "The majority decision maintains a cautious monetary policy stance that recognizes the identified risks for inflation convergence to the target," the bank stated in its communique.
Total inflation fell to 5.3% in November from 5.5% in October but stayed above the 2024 year-end level. Core inflation stood at 4.9%, down from 5.2% at the end of the previous year. However, one- and two-year inflation expectations rose more than observed inflation. The central bank noted third-quarter economic growth, with GDP expanding 3.4% (beating the 3.0% forecast), driven by 5.6% total consumption growth. Yet, the current account deficit widened to 2.4% of GDP from -1.5% the prior year, due to a trade imbalance.
External factors played a role, including the U.S. Federal Reserve's third consecutive rate cut to a 3.5%-3.75% range, the lowest in three years, amid persistent geopolitical tensions. President Gustavo Petro had warned that the bank would raise rates to deliver a "blow" to the growing economy. Analysts project year-end inflation at 5.2%, matching 2024, and anticipate adjustments in 2026. The failure to pass the Financing Law will force the government to balance the budget through cuts or deferrals.
