The Constitution and constitutional jurisprudence assign Banco de la República the specific mission of preserving the currency’s purchasing power. This translates into the objective of achieving and maintaining a low, stable inflation rate, in tandem with general economic policy, while taking into account economic growth.
What is the main tool used by Banco de la República to control inflation?
The policy interest rate is the main monetary policy instrument of Banco de la República. This is the interest rate at which the Bank lends or borrows resources from commercial banks in the short term. The Bank increases, decreases, or leaves it unchanged to achieve the annual inflation target.
Related BanRep Blog: Balancing Inflation and Growth through the Implementation of Monetary Policy by Banco de la República
Banco de la República is working to bring inflation back to the 3% target while ensuring that the impact of this convergence on economic growth remains as negligible as possible. Keeping inflation low and stable is a fundamental precondition for the economy to grow sustainably over time....
