Colombia Hiked Rates to 12%. Inflation Broke 6% a Week Later.

Colombia Hiked Rates to 12%. Inflation Broke 6% a Week Later describes the linkage between monetary policy tightening and inflation outcomes. Colombia’s inflation reached 6.14% in the year to June, and the central bank’s own survey had all forecasters below that figure. The report says the move was expected: in January, Banco de la República forecast inflation would reach 6.3% by December. It argues inflation’s rise was closely tied to expectations shifting after a significant increase in the minimum wage, decreed by President Gustavo Petro at 23.7% for 2026, lifting the floor to two million pesos a month, about $600, affecting roughly 2.4 million workers. The article attributes about 88% of the April increase to indexation and demand, and about 12% to supply shocks. On rates, it notes the policy rate rose from 9.25% at the start of the year to 12% after multiple meetings, with the June 30 decision split among directors.