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Colombia's central bank shocks with 100-bp rate hike to 10.25% - REUTERS
BOGOTA, Jan 30 (Reuters) - Colombia's central bank raised its benchmark interest rate by 100 basis points to 10.25% on Friday, its first hike in nearly three years and a larger move than most analysts had expected, as policymakers pointed to rising inflation pressures, a sharp jump in inflation expectations and mounting fiscal and external risks.
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The increase was approved by a divided seven-member board: four directors voted for the 100-basis-point hike, two voted for a 50-basis-point cut and one backed holding the rate unchanged, according to the central bank's statement.
A Reuters poll found that 15 of 26 analysts predicted a 50-basis-point hike to 9.75%, with only one predicting a 100-basis-point jump.
In its discussion, the board cited December inflation of 5.1%, slightly below end-2024, but noted that core inflation picked up to 5.02% in December, from 4.85% in November.
The central bank's long-term inflation target is 3%, plus or minus one percentage point.
Still, inflation expectations rose markedly in January, the board said. Inflation is set to end 2026 at 6.4% and 2027 at 4.8%, according to the median of a central bank poll of analysts.
The bank flagged a widening current account deficit, estimating it reached 2.4% of GDP in 2025, up from 1.6% in 2024, mainly due to faster import growth fueled by strong domestic demand alongside only modest export growth.
