Colombia’s Central Bank Holds Interest Rate at 9.25% Amid Lowest Inflation Since 2021 at 4.82% in June

The Banco de la República, Colombia's central bank, decided to maintain its benchmark interest rate at 9.25% in June 2025 amid ongoing fiscal uncertainty and inflation concerns. The decision to keep rates steady was met with disagreement from the Ministry of Finance. Meanwhile, inflation data released by Colombia's National Administrative Department of Statistics (DANE) showed that the annual inflation rate for June 2025 stood at 4.82%, marking the lowest level since 2021 and a notable decrease from 7.18% in June 2024. The monthly inflation variation was 0.10%, and the year-to-date inflation rate was 3.74%. The inflation decline was driven by decreases in fresh food and agro-industrial prices, though increases were noted in coffee, gold, milk, and processed foods. The inflation rate fell below market expectations and approached the upper limit of the central bank's target range. Some analysts suggest that if the central bank delays lowering the real interest rate, Colombia could face stagflation, characterized by stagnant economic growth and low inflation. Overall, the Colombian economy appears to be in a phase of adjustment, with inflation trending downward after a period of higher price increases.