LatinNews Daily - 01 July 2026

*Colombia’s central bank (Banrep) has raised interest rates by 75 basis points to 12%. This is the first increase in interest rates since March. In a statement explaining its decision, Banrep said that inflation had maintained an upward trend, with headline inflation running at 5.8% in May, while core inflation, which excludes volatile items like food and fuel, stood at 6.0%, which Banrep notes is moving further away from its target of 3.0% +/-1.5. The decision was approved by four of Banrep’s seven board members, with one voting to keep it unchanged and the other two voting to reduce it by 50 basis points. Banrep also highlights that the country’s GDP expanded 2.2% year-on-year in the first quarter of 2026, above 2.0% registered in the previous quarter, adding that “domestic demand has maintained a dynamism higher than production”. It adds that the labour market “continues to show historically low unemployment, with the unemployment rate at 8.0% in May, alongside significant wage increases” and notes high uncertainty regarding the external environment due to “the conflict in the Middle East and its impact on international fuel and fertiliser prices, as well as on financial markets’ reactions to monetary policy decisions in advanced economies”. The bank’s decision is the first since a 26 May ruling by Colombia’s council of state which suspended a rule requiring the finance minister to be present at its meetings. The move ended an institutional standoff between Banrep and the leftist government led by President Gustavo Petro which has opposed the rate cuts, with Petro’s finance minister, German Ávila Plazas, having resigned from Banrep’s board in protest at the bank’s March decision, which has affected its decision-making.

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