Colombia's central bank surprises with interest rate hold after spat over rises

BOGOTA - Colombia's central bank on Thursday surprised the market by unanimously holding its benchmark interest rate at 11.25%, as policymakers sought a compromise after a public spat between board members and the country's leftist government.

Though Finance Minister German Avila left the board's March meeting early and said the government was withdrawing over interest rate rises, he attended Thursday's meeting and cheered the decision as an example of coexisting amid differences of opinion.

"They chose consensus over maintaining a dispute that could have undermined the institutional standing of the central bank," said Camilo Perez, head of economic research at Banco de Bogota.

A majority of analysts in a Reuters poll earlier this week had predicted a 50-basis-point increase to 11.75%, while some projected a hike to 12% and two said rates would remain unchanged.

Policymakers have been seeking to rein in inflationary pressures stemming from a 23% minimum wage increase this year and higher public spending that has worsened government finances. President Gustavo Petro, who has repeatedly urged the board to lower rates to help economic growth, last week threatened to raise the minimum wage again - a move not seen in Colombia's recent history.

Though differences remain on the board, Thursday's decision balanced inflation concerns with efforts to stoke growth, board chief Leonardo Villar said.

"Although members of the board of directors hold differing views, they have, by consensus, taken the decision to keep the interest rate unchanged in an effort to reach agreements in the current situation," Villar told journalists at a press conference announcing the decision.

"It is appropriate to send a signal to the country that it is possible to seek agreements, to seek consensus, and for that reason, although we maintain our view that the bank's benchmark interest rates should be lowered, all members of the board have decided to keep the rate unchanged at this meeting," Avila said in the same conference.

Annual inflation stood at 5.56% at the end of March, well above the country's long-term target of 3%, which has been missed for the past five years.

The board will not vote on the rate in May, meaning the next potential change in borrowing costs will come after presidential elections to choose Petro's successor.

(Reporting by Nelson Bocanegra and Carlos Vargas; Writing by Julia Symmes Cobb; Editing by Lisa Shumaker and Alistair Bell)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published April 30, 2026 at 11:57 AM.