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Investing.com -- Colombia’s central bank kept its benchmark interest rate unchanged at 9.25% on Friday, as policymakers expressed caution over rising inflation and strong domestic demand.
The decision was made by a majority vote, with four directors supporting the hold, while two voted for a 50 basis point reduction and one favored a 25 basis point cut.
The bank noted that headline inflation rose for the third consecutive month in September, reaching 5.2%, matching the level seen at the end of 2024. Core inflation, which excludes food and regulated items, remained steady at 4.8%.
Inflation expectations from both surveys and public debt market indicators increased, with all measures exceeding the bank’s 3% target for the next two years.
Economic activity indicators suggest robust domestic demand continues to drive the Colombian economy, supported by private and public consumption along with a rebound in machinery, equipment, and civil works investment.
The bank also highlighted that external financial conditions have become more accommodative following interest rate cuts in the United States.
Colombia’s trade deficit has continued to widen as imports outpace exports, driven by strong domestic demand and reduced export volumes of mining and energy products.
The central bank stated that its cautious monetary policy stance recognizes the risks to inflation’s convergence to target, and that future rate decisions will depend on inflation developments, economic activity, and the balance of domestic and external risks.
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