Colombia Holds Interest Rates Steady in May and June

Colombia’s Central Bank (Banco de la Republica) decided to keep interest rates unchanged for May and June, leaving the cost of money at 11.25%. The decision, adopted unanimously, reflects a cautious stance in the face of an economy that still faces inflationary pressures and an uncertain international environment.

However, the apparent unity masks underlying differences within the board of directors. The bank’s governor, Leonardo Villar, acknowledged that there are conflicting views on the direction of monetary policy at a time when the country is debating whether to continue containing inflation or to send signals of support for growth.

With this decision, Colombia’s central bank follows in the footsteps of the U.S. Federal Reserve and the European Central Bank, which adopted the same measure in their meetings yesterday.

The finance minister, Leonardo Villar, reiterated that the rise in inflation is not directly related to the significant increase in the minimum wage decreed by the government in December, but rather to higher energy and communications prices.

The next meeting of the bank’s board will take place at the end of June, when new decisions on interest rates will be made.

Colombia holds interest rates steady in May and June

Although no member voted against, the internal discussion once again revealed two clearly differentiated camps. On one side are those who believe it is still not the time to ease monetary policy.

This group argues that inflation, while not out of control, remains a latent risk, especially in a global context marked by volatile energy prices and geopolitical tensions that could spill over into the domestic economy.

On the other side, some board members—closer to the positions of the Petro administration—defend the need to begin a cycle of rate cuts. They argue that the current level remains restrictive and limits the economic recovery, affecting consumption and investment. These positions, more aligned with the government’s view, seek to accelerate a recovery that is still advancing with fragility.

Villar preferred to highlight the consensus reached this time, as the vote was unanimous, following two significant hikes in the January and March meetings.

Nevertheless, the bank’s governor made it clear that the decision to hold rates reflects the need to observe more clearly the evolution of key variables, such as inflation—which remains far from the 3% target—credit performance, and the external environment.

The Central Bank’s decision leaves the country in a wait-and-see position. For now, the priority remains consolidating the reduction of inflation without jeopardizing macroeconomic stability. But the internal debate suggests that the path is not fully defined and highlights tensions between much of the bank’s leadership and the Petro administration.

Decisión de política monetaria: En su reunión de abril la #JuntaBanRep decidió por unanimidad mantener inalterada la tasa de interés de política monetaria en 11,25%.

Más información en el comunicado de prensa 👉 https://t.co/68bfs1IArx

Si bien los miembros de la Junta Directiva… pic.twitter.com/R4sn4fOejE

— Banco República 🇨🇴 (@BancoRepublica) April 30, 2026

The return of the finance minister

The meeting was also marked by the return of Finance Minister German Avila, who participated again after the episode that generated tensions in the previous session. On that occasion, the minister left the meeting before its conclusion and publicly disclosed the bank’s decision in advance, a move that was interpreted as a breach of institutional protocol.

According to central bank rules, it is the governor who must officially communicate the board’s decisions, precisely to preserve the independence and credibility of monetary policy. The episode sparked a debate over the limits of government participation in these discussions and caused discomfort among some board members.

This time, the minister’s participation proceeded without incident, in an attempt to mend relations and restore normal operations within the body.

The decision to hold rates cannot be understood without the global context. The recent rise in oil prices, driven by the conflict in the Middle East, has reignited inflation fears in multiple economies, including Colombia. This factor adds pressure on domestic costs and complicates the central bank’s room for maneuver.

In that scenario, Minister Avila announced that as of May 1 a slight increase in gasoline prices will take effect in Colombia. The measure aims to reflect higher crude prices in international markets and avoid a greater imbalance in fiscal accounts, especially in the fuel price stabilization fund.

The minister and government representative on the central bank’s board emphasized that inflationary pressure is a “global problem,” given the complex context of “a global economy that is being impacted,” which has moved away from “the protectionism of the past 50 years, as a result of the U.S. president’s decision to impose tariff measures.”

Finally, Avila announced a subsidy for fertilizers to lower production costs and recalled that heavy rains in recent months in several parts of the country affected agricultural production, which “necessarily impacted Colombian inflation.”