Colombian Inflation Drops to 4.82%, Lowest Level in Nearly Four Years

Colombian inflation slowed to 4.82% in June, its lowest level in nearly four years, below the median forecast of 19 economists surveyed by Bloomberg. The result may bolster the case for a rate cut, which three central bank board members, including the finance minister, argued for last month. However, some policymakers have expressed concerns about the prolonged deviation from the bank's target range of 2% to 4%, which could undermine its credibility.

Colombian inflation slowed to 4.82% in June, marking the lowest level in nearly four years. This figure is significantly below the median forecast of 19 economists surveyed by Bloomberg, which stood at 19.00% [1]. The decrease in inflation may bolster the case for a rate cut, as three central bank board members, including the finance minister, had previously advocated for such a move last month [2].

The Bank of the Republic (BanRep) has been closely monitoring the economic indicators and has made significant adjustments to its monetary policy. In May, the Board of Directors of BanRep decided unanimously to reduce the benchmark rate by 25 basis points (bps) to 9.25% [3]. This decision was based on the recent analysis and forecasts prepared by the technical staff of BanRep, which reviewed the performance of key economic indicators such as inflation, GDP, and the monetary policy rate [4].

However, some policymakers have expressed concerns about the prolonged deviation from the bank's target range of 2% to 4%. This deviation could potentially undermine the credibility of the central bank's monetary policy. The Bank of the Republic is committed to maintaining price stability and promoting economic growth, and it will continue to monitor the economic conditions closely [5].

The latest data on inflation is part of a broader trend in the Colombian economy. According to the Labor Market Report for April 2025, employment growth has been driven by the non-salaried segment and the increase in remote work during the post-pandemic period [6]. These factors have contributed to the overall improvement in economic activity, despite the short-term moderation expected in the macroeconomic indicators [7].

In conclusion, the slowdown in Colombian inflation to 4.82% in June is a positive development for the economy. However, the central bank will need to carefully balance the need for rate cuts with the potential risks associated with prolonged deviations from its target range. The Bank of the Republic will continue to monitor the economic indicators and adjust its monetary policy accordingly to ensure price stability and promote sustainable economic growth.

References:

[1] https://www.banrep.gov.co/en
[2] https://www.banrep.gov.co/en
[3] https://www.banrep.gov.co/en
[4] https://www.banrep.gov.co/en
[5] https://www.banrep.gov.co/en
[6] https://www.banrep.gov.co/en
[7] https://www.banrep.gov.co/en