The announcement by Colombia’s central bank to keep the monetary policy interest rate at 9.25% to close out 2025 cemented an expectation that had been building in the financial market, although it was surrounded by tensions with the message conveyed by President Gustavo Petro just yesterday.
For months, Colombia’s monetary authority has opted to hold the benchmark at that level since it was set in May of this year, and with the latest meeting of the Board of Directors, it confirmed that there will be no changes altering the course of monetary policy for the remainder of the year.
This decision comes in an environment in which variables such as inflation, economic growth, demand dynamics, and agents’ expectations remain decisive factors in calibrating the risks of a rate move, either upward or downward.
The official statement from the issuing bank contrasts with what President Gustavo Petro suggested just yesterday, when, in a comment on social media, he pointed to the possibility that the institution could raise rates to address inflationary pressures or anticipate changes in the economic context.
Finally, the stance of the board of directors was different and focused on keeping the rate unchanged, which not only dispelled expectations of a hike but also reaffirmed the bank’s relative independence from political pressure. The decision is a clear reflection of the caution with which monetary policymakers have been operating, aware that a premature move could destabilize a still incomplete convergence toward the inflation target.
Colombia maintains interest rates to close 2025
To understand why the central bank’s board of directors decided to keep the interest rate unchanged at 9.25%, it is necessary to look at a set of macroeconomic variables that have evolved over the year. Headline inflation has declined from higher levels but remains above the official target set by the institution, implying that inflationary pressures persist in the economy.
Recent data indicate that both headline and core inflation — excluding food and regulated goods — have shown moderation, but have not yet converged to the long-term target of 3%. This slow decline requires maintaining a cautious bias in monetary policy, as an overly aggressive cut could reignite price pressures. One- and two-year inflation expectations appear to have adjusted upward in some market segments, which also weighs against rapid rate reductions.
Beyond inflation, economic activity has shown signs of moderate growth, with gross domestic product expansion slightly exceeding some analysts’ projections, partly driven by a strengthening of domestic demand.
In this sense, the momentum in consumption and investment has served as an anchor for the board to keep rates steady, seeking not to cool prematurely a recovery that remains fragile in the face of external shocks.
The international context, marked by geopolitical tensions, volatility in financial markets, and changes in external financing conditions, has also influenced the country’s risk perception, limiting the monetary authority’s room for maneuver.
Taking all of this into account, at today’s midday meeting, four members voted to keep the rate unchanged at 9.25%, two favored a 50-basis-point reduction, and one supported a 25-basis-point cut.
La tasa de interés de política monetaria se mantiene en 9,25%.
La decisión adoptada por la mayoría de los miembros de la #JuntaBanRep mantiene una postura cautelosa de la política monetaria.
En su discusión de política, la Junta tuvo en cuenta los siguientes elementos 👇 pic.twitter.com/54Z9VZZ9LH
— Banco República 🇨🇴 (@BancoRepublica) December 19, 2025
The Central Bank’s independence and the outlook for 2026
The decision to keep interest rates at 9.25% has also reignited the debate over the independence of the issuing bank from the executive branch, something that external analysts highlight as an important strength of the Colombian economy.
The fact that President Petro had announced a supposed rate increase — after his government had been pressing for months for a cut — underscores that final decisions are made independently by the central bank’s board of directors.
With a more technical and prudent stance, the central bank’s leadership once again sends a message of caution that, despite criticism from the government — which is seeking a cut to ease access to credit and reactivate the economy — has maintained for six months its decision to keep rates at an elevated level.
This balance between technical caution and sensitivity to overall economic conditions is reflected in the fact that several board members reportedly considered different alternatives, including gradual cuts, but ultimately the decision to maintain the status quo prevailed so as not to risk the credibility of monetary policy.
Future decisions, according to official statements, will largely depend on how inflation indicators, market expectations, and economic activity evolve in the coming months. In this way, the board of directors seeks not only to stabilize the economy in the short term but also to lay the groundwork for an orderly convergence toward inflation levels closer to the target.
Looking ahead to 2026, analysts and economic agents will need to closely monitor how the main variables affecting monetary policy behave. Inflation — surely the weakest point of the Colombian economy, which earned special mention from The Economist — must continue its descent toward levels consistent with the established target: 3%.