Servicios

Idiosyncratic factors include:Road blockades in 2021 that affected supplyStrong depreciation of the peso in 2021 and 2022Removal of temporary reliefs for fuel prices, taxes, and feesExpansionary fiscal policyReal increases in the minimum wage above productivity growth

Foreign reserves are the country’s holdings of strong foreign currencies (such as US dollars, euros, and others) that are managed by Banco de la República.

The opinions contained in this document are the sole responsibility of the author and do not commit Banco de la República or its Board of Directors. 

The Constitution eliminated the Bank’s role as a development bank and strengthened its function as a monetary authority. It established that the Bank cannot grant credit quotas or guarantees to private parties; that it may only finance the State with the unanimous approval of the Board of Directors…

The interest rate on government bonds depends on the policy interest rate set by Banco de la República for short-term, risk-free operations, on the policy rate that bond investors expect in the future, and on the risk premium they require to cover the risks of long-term operations inherent to…

Central banks – in both advanced and emerging economies – raised interest rates, effectively tightening monetary policy. As a result, global inflation fell significantly, from 8.7% in 2022 to 6.7% in 2023, to 5.8% in 2024, and ended 2025 at 4.1%.

After the pandemic, the economy recovered rapidly, accompanied by higher inflation, which led the Board of Directors of Banco de la República to raise the interest rate to bring it back towards the target. Once inflation began to decline, it began a cycle of interest rate reductions that was…

This risk premium depends on several factors, one of which is the strength of the government’s finances. If investors perceive the government’s financial situation as solid, the risk premium will be lower; if, on the contrary, they perceive that the government’s debt and fiscal deficit are rising…

An inflation-targeting framework means that Banco de la República makes decisions regarding the policy interest rate to ensure that inflation approaches the target and the economy operates at a sustainable pace over time.

The historical data show that countries with more independent central banks have had lower inflation. Conversely, countries with more limited independence experienced high inflation, including hyperinflation rates exceeding 1000% per year.

If the shock is temporary, the Board of Directors of Banco de la República can avoid reacting immediately. But if the price increase becomes persistent and affects inflation expectations, it may be necessary to raise interest rates.

When inflation is high, money quickly loses its value; this means that a household can buy fewer basic goods such as food with the same amount of money. When inflation is both high and volatile, it becomes difficult to finance long-term projects, such as those required to expand companies’…

The interest rate on government bonds and their risk premium component have risen, while the policy interest rate has decreased or remained unchanged. Given this, the recent increase in the 10-year government bond interest rate is related to the risk premium for the risk of these bonds, due to the…

Given its mandate to control inflation, the Board of Directors of Banco de la República increased the policy interest rate from 9.25% in December 2025 to 12% in July 2026, at a time when prices were rising rapidly, and household and government spending continued to exceed sustainable levels.

The CBI is an indicator used to measure a central bank’s independence by evaluating four key features: the central bank’s legal mandate, its governance structure and formal independence, its ability to conduct monetary policy without government interference, and its power to finance (or not)…

The policy interest rate influences financial market rates, thereby impacting the exchange rate, consumption, investment, and inflation expectations. When demand exceeds supply, the Bank raises the rate to control inflation, encourage saving, reduce credit, and stabilize the exchange rate.

The inflation target is the quantitative objective set by Banco de la República to fulfill its constitutional mandate of preserving the purchasing power of money through low and stable inflation. The Bank sets a target to keep inflation close to that level and to guide its decisions regarding the…

Colombia’s inflation target is 3.0%. It has been set at this level since 2009 and it is the same in countries such as Chile, Mexico, Brazil, Costa Rica, China, Hungary, the Philippines, and Georgia. It is also very close to the targets of Australia, Indonesia, Iceland, Malaysia, Poland, and Romania…

The inflation target is the quantitative objective set by Banco de la República to comply with the constitutional mandate of preserving the purchasing power of money through low and stable inflation. When the target is credible, it becomes an inflation anchor around which inflation expectations…

In the most recent interval, the mortgage rate has been more responsive to the government bond rate than to the benchmark rate. Given the recent deterioration in the fiscal situation, the most significant implication of this association is not only that servicing government bonds becomes more…

As of December 31, 2025, net foreign reserves amounted to USD 66.3 billion. Banco de la República will transfer to the National Government in March approximately COP 13.9 trillion pesos in profits generated during its operations in 2025.

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…

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.

When inflation is close to the target and demand is expected to exceed potential output, in turn generating upward price pressures, Banco de la República anticipates the situation by increasing the interest rate to avoid the economy’s overheating, circumvent most inflationary pressures, and…