Colombia’s president, Gustavo Petro, once again strained relations with the Central Bank (Banco de la Republica) by issuing a direct warning: if the monetary authority continues to raise interest rates, the government will respond with another increase in the minimum wage.
The statement, made at Tuesday’s Cabinet meeting, not only reopens the debate over the country’s economic policy but also deepens an institutional clash that has been escalating in recent months between the executive branch and Colombia’s monetary authority.
The warning comes at a particularly delicate moment. The central bank has tightened its monetary policy — the current rate stands at 11.25% — to contain inflation, with rate hikes it has already warned will continue, while the executive insists that those decisions affect growth and employment.
Amid this tension, the minimum wage —which has already seen one of the highest increases in decades— is becoming the new battleground between two opposing views on how to manage the economy.
Colombia’s Petro warns of another minimum wage hike if interest rates rise again
During Tuesday’s Cabinet meeting, April 21, Petro was emphatic in questioning the Central Bank’s decisions. The president argued that if the Board of Directors continues to raise rates, his government will not hesitate to push for another increase in the minimum wage as a measure to protect workers.
“If they raise the interest rate further … we will raise wages again,” the president said, in remarks that underscored the executive’s confrontational tone toward the monetary authority. The message was interpreted by different sectors as an ultimatum that introduces a political element into the technical discussion over interest rates.
Petro has insisted that the bank’s decisions directly affect households, particularly through their impact on credit and productive activity.
In his view, monetary tightening can slow key sectors such as housing and worsen the population’s economic conditions. In this sense, the president advocates for protecting purchasing power under the constitutional concept of a “living and mobile wage.”
For its part, the Central Bank defends its strategy as necessary to control inflation, which remains above the official target. In that context, raising rates seeks to cool demand and stabilize prices, even at the cost of slowing the economy in the short term.
However, the government questions that logic. Petro has pointed out that recent inflation does not respond solely to domestic factors, but also to external variables — such as global political instability — and speculative behavior in some sectors. From that perspective, raising rates would be the wrong response, punishing production without addressing the real causes of rising prices.
A confrontation in an electoral context
Monetary policy and wage policy are, in theory, designed to complement each other. But in this case, they appear to be moving in opposite directions: while the bank seeks to contain inflation with high rates, the government proposes wage increases that could put further pressure on prices, in a loop that only reinforces a confrontation that has persisted since last year.
In this regard, the president again criticized the management of the bank’s board of directors, accusing them of killing the economy, “bringing it to a halt for electoral purposes.”
The confrontation between the executive and the Central Bank is reaching its most intense phase. Just yesterday, an economic forum titled “Monetary policy in a progressive context” was held. Leonardo Villar, the bank’s governor, was invited to participate but declined the invitation extended by the finance minister.
In a letter sent to the minister, the Central Bank’s governor said the event was neither “timely nor appropriate” given the accusations made by the government against members of the board. Villar also requested that, to foster a climate of dialogue, the meeting be held after the elections, in order to separate it from the electoral contest.
In the document, the head of the Central Bank referred to the criticism coming from the executive branch, calling it “unfounded and contrary to the truth.” Villar emphasized that the Bank’s constitutional mandate “is to maintain the purchasing power of the currency, which primarily benefits the most vulnerable sectors of society.”
🇨🇴#Economía | El presidente @petrogustavo criticó al gerente del Banco de la República, Leonardo Villar, luego de que este confirmara su ausencia en el foro “Política monetaria en un contexto progresista”, organizado por el Ministerio de Hacienda.
💰El foro “Política monetaria… pic.twitter.com/W6fORVdrfB
— RTVC Noticias (@RTVCnoticias) April 21, 2026
An economic forum tailored to the Petro government
The economic forum “Monetary policy in a progressive context,” held yesterday in Bogota, brought together economists, officials, academics, and political leaders to debate the role of central banks in Latin America and, in particular, in Colombia.
Convened by the Ministry of Finance, the central focus of the forum was a critique of the traditional approach to monetary policy, based on controlling inflation as an almost exclusive priority. From the progressive perspective promoted by the government, several participants raised the need to revisit that paradigm and move toward a more active model, in which monetary policy also contributes to economic growth, employment, and the reduction of inequalities.
During the interventions, it was emphasized that central bank decisions have concrete social effects, especially on credit, investment, and the well-being of the most vulnerable sectors. In this regard, alternatives such as subsidies, preferential credit, and greater coordination between monetary and fiscal policy were discussed to mitigate the impacts of restrictive policies.
The Minister of Finance German Avila was one of the main spokespersons for this view. He criticized the increase in interest rates and warned that it could slow growth, raise unemployment, and make public debt more expensive, defending the idea that current inflation is driven more by supply factors than by excess demand.
The forum also addressed a deeper debate: whether central bank independence should remain an unquestionable technical principle or whether it should be reconsidered to incorporate greater democratic oversight and alignment with social objectives.