The Bank of the Republic maintained interest rates in Colombia until June 2025.

The board of directors of the Bank of the Republic met this Friday to review the interest rate for the month of June and decided to keep it unchanged at 9.25 percent.

The board's stance reflects caution in the face of recent economic and fiscal developments in the country. The issuer only cut rates twice this year.

Banco de la República General Manager Leonardo Villar said that four of the seven board members voted to maintain the rate, while two advocated for a 50 basis point cut, and one for a 25 basis point cut.

The decision, the issuer explained, was made in a context of inflation expectations still above the target and with signs of a sustained economic recovery.

As an argument for its decision, the central bank explained that during April and May, annual inflation fell marginally from 5.2 to 5.1 percent, while core inflation—which excludes food and regulated services—fell from 4.9 to 4.8 percent. However, rigidity in items such as food and services, and a slight rebound in goods, have limited a more pronounced decline.

According to the Bank, inflation expectations reflected in surveys remain above the long-term target (3 percent), indicating a slower-than-expected convergence. This perception was crucial in maintaining a prudent monetary policy.

In contrast to inflation, economic activity has shown signs of dynamism. The Colombian economy grew 2.7 percent in the first quarter of 2025, exceeding the bank's own technical team's projections of 2.5 percent. For the second quarter, indicators suggest this trend may have continued.

The bank's official economic growth forecast for the full year remains at 2.7 percent, with sectors such as trade, transportation, and services driving the recovery.

One of the key elements considered by the board was the projected increase in the fiscal deficit for 2025 and beyond.

"This situation poses a challenge to the sustainability of public finances and limits the Bank's ability to relax its monetary policy in the short term," the bank's statement said.

They also added that international financial conditions remain restrictive, in an environment marked by heightened geopolitical tensions. " While uncertainty about U.S. tariff policies has eased, the risk remains," they argue.