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The minimum wage (MW) is one of the most widely used public policies in almost all the countries. Included among its objectives are the protection of workers against unduly low wages and to contribute to the reduction of poverty and inequality. However, there has been evidence of the adverse…

The U.S. financial system experienced a period of stress during March 2023 in which several regional banks including First Republic Bank, Silicon Valley Bank, Signature Bank, and Silvergate Bank, etc., were affected. The collapse of these institutions had multiple causes and exposed the potential…

1. Performance of the Exchange Rate and some of its Determinants

In recent years, Colombia economy has seen a growing trend in the digitalization of payments (perhaps partly as a consequence of the pandemic). This is evident in the increased use of electronic channels.

Since the end of 2021, the growth of inflationary pressure brought about by a combination of supply and demand factors has generated a scenario of tightening international financial conditions in an environment of normalization of monetary policy interest rates and a new cycle of dollar…

Automatic price adjustment mechanisms, known as indexing, have mainly been a relatively common practice in developing economies even under different macroeconomic environments. These mechanisms often arise spontaneously in agents’ private contracts as a tool to protect themselves from high and…

ApproachSince the enactment of Law 100 of 1993, the health care system in Colombia has undergone significant transformations that have resulted in improvements in health indicators, expanded coverage, and financial protection for the population.

ApproachThe Global Financial Cycle (GFC) is a common movement of financial variables transmitted to emerging economies through various channels. During periods of GFC expansion, emerging economies tend to exhibit higher capital inflows, increased asset prices, and better conditions for accessing…

This document examines the evolution and determinants of portfolio flows in the Colombian economy, which comprises investments on public debt bonds, shares, and private bonds. Structural changes along the last few years owed to either regulatory or market shocks are identified. The international…

Banco de la República (the Central Bank of Colombia) generates information for decision-making, accountability, and public dissemination purposes. In particular, the Financial Markets Report is framed within the principle of public disclosure and contributes to fulfill the Bank's service of…

Despite significant declines in 2023, inflation indicators remain above the target of most central banks.

Global inflationary pressures remain high, although showing a downward trend, while economic activity demonstrated greater resilience than expected.

Global inflationary pressures remain high, although they continued to exhibit a downward trend in most countries, mainly due to lower supply pressures.

The analysis presented in this edition of the Report allows concluding that the Colombian financial system has ample liquidity and solvency levels which are sufficient to confront the occurrence of extreme and tail risk events.

I. Performance of credit institutionsCredit institutions in Colombia have adequate capital and liquidity levels to confront the materialization of extreme risks of low probability at individual and consolidated levels.

Main characteristics of Banco de la República's reserves management policyReserves are invested in financial assets with high levels of safety and liquidity, characterized by a large secondary market.The percentage of reserves that remains available to cover immediate liquidity needs, called…

According to the most recent information from the Great Integrated Household Survey (GEIH in Spanish), as of May 2023, employment in the national aggregate grew by 3.4% in annual terms, mainly driven by the rural area, which grew by 4.0% annually, while in the urban area employment grew by 2.9%.…

As of August 2023, employment continued to grow in both urban and rural areas. According to data from the Official Colombian Household Survey (GEIH, by its acronym in Spanish), national aggregate employment grew by 4.8% annually, driven mainly by the strong performance of employment in urban areas…

Data from the household survey for the quarter  moving average ending in February show that annual job growth is slowing, and its levels remain stable. Although employment increased by 3.6% on an annual basis, equivalent to 768,000 new jobs, it has remained relatively stable in recent months.…

Inflation would peak in March and start to gradually decline as of the second quarter of 2023, bringing inflation back to the 3% target over the next two years.

1. Macroeconomic SummaryIn December, headline inflation (13.1%) and the average of the core inflation measures (10.3%) continued to trend upward, posting higher rates than those estimated by the Central Bank's technical staff and surpassing the market average. Inflation expectations for all terms…

As foreseen in the April Report, inflation began to fall in the second quarter of 2023. It is expected to continue declining in the following quarters and return near the 3% target by the end of 2024.

Inflation has decreased since April, and it is projected to continue to reduce significantly throughout 2024 as it converges toward 3%.

IntroductionBanco de la República is celebrating its 100th anniversary in 2023. This is a very significant anniversary and one that provides an opportunity to highlight the contribution the Bank has made to the country’s development. Its track record as guarantor of monetary stability has…

International Macroeconomic Environment