Colombia’s central bank tightened its monetary policy again amid growing tensions with the government. The board of directors decided this Tuesday to raise the interest rate by 100 basis points to 11.25%, marking two consecutive increases of the same magnitude in just one month.
The decision confirms a more restrictive shift in an environment marked by persistent inflationary pressures and rising price expectations, but it was not without controversy involving the government’s representative, Finance Minister German Avila.
In fact, this move not only affects the cost of credit and growth prospects, but also deepens the rift between the monetary authority and the executive branch.
In an unusual development, the finance minister, one of the seven members of the central bank’s board, left the session before it concluded and disclosed the decision to the media, while issuing harsh criticism of the majority of the board that backed the increase.
Related: All-Out Conflict in Colombia Between the Government and the Central Bank.
Colombia’s Central Bank raises interest rates as Finance Minister walks out of meeting
The increase to 11.25% follows the January hike, when the central bank had already raised the rate by 100 basis points to 10.25%, breaking a period of relative stability.
This new adjustment consolidates a tightening path that, according to analysts close to the central bank’s stance, responds to the deterioration of inflation expectations and to domestic factors such as the increase in the minimum wage and the persistence of price pressures.
In recent months, various think tanks and financial institutions had anticipated that the monetary authority would maintain a contractionary stance. Market consensus pointed precisely to an additional increase of up to 100 basis points at the March meeting, driven by a rebound in inflation expectations above 6% for 2026.
The vote once again revealed internal divisions. Four board members supported the hike, while other co-directors advocated more moderate alternatives or even keeping the rate unchanged, reflecting uncertainty over the balance between controlling inflation and not excessively slowing economic activity.
For its part, the government rejects these arguments and questions the decision, stating that it “seriously harms the productive economy and responds to the interests of big capital.”
Decisión de política monetaria: En su reunión de marzo la #JuntaBanRep decidió por mayoría subir la tasa de interés de política monetaria a 11,25%.
Cuatro directores votaron a favor de esta decisión, dos por una reducción de 50 pbs. y uno por mantenerla inalterada.
Más… pic.twitter.com/38fsDfMy3c
— Banco República 🇨🇴 (@BancoRepublica) March 31, 2026
Open clash with the executive
The decision triggered a new episode of institutional tension. The finance minister left the board meeting before it concluded, as a sign of disagreement with the direction of monetary policy. Shortly afterward, he appeared before the media to announce the outcome and openly challenge the increase.
“We are withdrawing from a Board of Directors that is making decisions that are irresponsible toward the country and completely incoherent,” Minister Avila explained at a press conference held at the ministry’s headquarters, before going on to describe the Central Bank’s decision as “disproportionate.”
The head of the economic portfolio has repeatedly argued that high interest rates make credit more expensive, affect investment, and limit the economic recovery. His position contrasts with that of the central bank, which has insisted on the need to maintain a restrictive policy to prevent inflation expectations from becoming unanchored.
The episode deepens a divide that had already been widening since the beginning of the year. At the January meeting, when a 100 basis point increase was also approved by a split vote, the government had expressed discomfort with the monetary authority’s contractionary bias.
With the rate at 11.25% and political tensions rising, Colombia’s economic outlook is entering a phase of greater uncertainty. Markets will be watching the central bank’s next decisions and the evolution of inflation to determine whether the tightening cycle will continue or begin to stabilize.
While Minister Avila called for changes in the decision-making process regarding interest rates, the Central Bank’s manager, Leonardo Villar, “categorically” denied that the board of directors’ decisions were influenced by the interests of the financial sector, as alleged by the representative of the Petro administration on that governing body.
For now, the central bank’s message is clear: the priority remains containing inflationary pressures. But the cost of that strategy, in terms of growth and its relationship with the government, is becoming increasingly visible.