Latin America Economics & Strategy Daily: Banrep & BCRD Decisions, USMCA, Brazil Elections, Colombia New MinFin

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Latin America Economics & Strategy Daily: Banrep & BCRD Decisions, USMCA, Brazil Elections, Colombia New MinFin

Latin America Economics & Strategy Daily

01 July 2026 Citi Research

Colombia

Banrep delivered a hawkish surprise with a 75bp hike to 12.00%, signalling that

inflation persistence remains the dominant concern despite expectations

centered on a smaller move. The decision exceeded the median expectation for a

50bp increase and maintained the now familiar 4-1-2 split between hike, hold, and

cut votes, underscoring that the board’s hawkish majority remains firmly in control.

Policymakers highlighted headline inflation at 5.8% YoY, core inflation at 6.0%, and

inflation expectations that remain well above target across horizons, while also

emphasizing resilient growth, firm domestic demand, a still-tight labor market, and

robust wage dynamics. The message continues to be that the board sees inflation

persistence as the binding macro constraint. More importantly, Governor Villar

cautioned that a return below the upper bound of the target range next year

remains a low-confidence outcome and reiterated that inflation is unlikely to

converge to target until 2028, reinforcing a higher-for-longer policy stance. While

guidance remained explicitly data dependent, the combination of the larger move

and cautious inflation outlook suggests the bar for ending the tightening cycle

remains elevated, with fiscal dynamics, inflation expectations, and incoming price

data determining whether additional hikes are required. We expect a new hike to

take place in July's policy meeting.

De la Espriella's appointment of Miguel Gómez Martínez as finance minister-

designate reinforces expectations of a more orthodox policy mix centered on

fiscal consolidation and institutional continuity.