Colombia’s inflation unexpectedly accelerated in January, rising 5.22% year-on-year, surpassing the median estimate of 5.10% by economists surveyed by Bloomberg. This marks an increase from the previous month’s inflation rate of 5.20%.
For the fourth consecutive year, Colombia overshot its inflation target of 3%, plus or minus one percentage point, raising concerns about persistent price pressures.
In response, the Colombian central bank’s monetary policy committee decided last week to keep borrowing costs unchanged at 9.5%, halting a series of interest rate cuts that began in 2023. This decision came amid growing concerns over Colombia’s fiscal outlook, a significant minimum wage hike, and potential tariff threats from U.S. President Donald Trump.
The central bank’s economists now predict a slower pace in the convergence of inflation to the target, with inflation expected to end 2025 at around 4%. Challenges include a nearly 10% increase in the minimum wage, rising producer price inflation, and a rebound in inflation expectations.
Some economists expect a shift toward more dovish policy after President Gustavo Petro appointed Laura Moisa and Cesar Giraldo as new central bank co-directors. The next policy meeting is scheduled for the end of March.
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