Colombia’s central bank is expected to hold interest rates at 12% for a second straight meeting, according to 22 of 29 analysts surveyed by Bloomberg, though a split decision is anticipated with five expecting a half-point hike and two forecasting a quarter-point increase. Governor Leonardo Villar leads the seven-member board as inflation remains above target, reaching 6.24% in August—more than double the 3% goal. The decision comes amid fiscal concerns, with the new administration of Abelardo de la Espriella warning the deficit could reach 9.4% of GDP without adjustments, while a fragmented Congress may hinder austerity plans.

External pressures include higher oil prices from the war in Iran and El Niño-driven food inflation, though slowing economic activity and tight monetary conditions support a hold. Economists like Munir Jalil of BTG and Camilo Pérez of Banco de Bogotá stress the need for future hikes to restore credibility, with Pérez noting this year has been tough for the central bank’s reputation. Finance Minister Miguel Gómez, in his first central bank meeting as voting member, pledged to respect institutional independence while acknowledging inflation as a pressing challenge.