Colombia Interest Rate 2026: Central Bank Hits 12%, Eyes 12.5% on July 31

The Colombia interest rate 2026 climbed to 12% on June 30 — its highest level since April 2024 — after a split vote by the Banco de la República’s board, and analysts widely expect the bank to push it higher still, to 12.5%, when the board meets again on July 31, 2026 (Banco de la República meeting schedule). For anyone holding a peso-denominated mortgage, personal loan, or CDT in Colombia, that’s not an abstract macro headline — it’s the number your bank uses to reprice what you owe, or earn, every month.

What the board decided on June 30

The Banco de la República’s seven-member board raised the benchmark rate by 75 basis points, from 11.25% to 12%, in a split 4-2-1 vote: four directors backed the hike, two preferred a 50-basis-point cut, and one voted to hold rates steady, according to La República. The bank cited accelerating inflation as the driver — annual inflation hit 5.8% in May 2026, and core inflation (stripping out food and regulated prices) reached 6.0%, both well above the bank’s 3% target. Rates have now risen 275 basis points since January 2026, when the year opened at 9.25% (La República).

Why July 31 is the one to watch

Analysts surveyed ahead of the next meeting expect the board to raise the rate a further 50 basis points, to 12.5%, and to treat that as the final move of this tightening cycle — with cuts beginning gradually sometime in early 2027, according to Infobae. Governor Leonardo Villar has framed the increases bluntly: “We have faced inflationary pressures that have forced us to increase interest rates, adopt measures that are not pleasant, not popular, but indispensable for a return to a more sustainable situation” (Infobae). Colombia’s central bank observes a media blackout period from July 25–31 ahead of the decision, per its own official schedule, so no fresh signaling is expected before the vote itself.

What it means if you’re borrowing in pesos

Colombia’s policy rate is the floor the central bank charges commercial banks, and lenders pass increases through to consumer credit, mortgages, and business loans, per Infobae’s reporting. Peso-denominated home loans (crédito de vivienda) were already running around 13% effective annual rate industry-wide earlier in 2026, and a further Banco de la República hike raises that baseline again. If your mortgage is UVR-indexed rather than a flat peso rate, there’s a second layer: the UVR unit itself rises with inflation — it moved from 410.5604 to 413.7628 between mid-May and mid-June 2026 alone, an annualized pace of roughly 5.6%–5.7% — so both the benchmark rate and the inflation-linked principal can climb at the same time (Infobae). If you’re carrying or considering COP-denominated debt — a mortgage on a Poblado or Laureles apartment, a car loan, a business line of credit — this is the environment to shop rates carefully and ask your bank whether your loan is fixed or UVR-linked before you sign anything.

The upside: CDT yields for peso savers

The same rate hikes make CDTs (certificados de depósito a término, Colombia’s term deposits) more attractive for anyone sitting on pesos. As of July 2026, banks and fintechs were advertising CDT rates from roughly 9%–11% effective annual on shorter 90–180 day terms up to 13%–14% on terms of a year or more at some digital banks, per Infobae. For expats already holding a Colombian bank account with idle pesos — say, funds earmarked for rent or a future purchase — that’s a materially better return than a savings account, though CDT terms typically lock your money up and Colombia taxes the interest. As always, rates vary by bank and change with each Banco de la República meeting, so confirm the current offer before committing funds.

The political backdrop

The hike hasn’t gone over well in Bogotá. President Gustavo Petro criticized the move, arguing “raising the interest rate further only leads to paralysis,” pointing to Colombia’s low unemployment (8% in May, among the lowest in decades) as evidence the economy didn’t need cooling. Finance Minister Germán Ávila, who voted for a cut, called the hike “an incorrect decision” for the current moment (El Colombiano). The central bank is independent of the executive, so that friction doesn’t change the mechanics above — but it’s a sign the July 31 decision, and whatever the board signals about 2027, will stay politically charged.

This intersects with two other threads we’ve been tracking: the peso’s decade-strong run against the dollar, which the high policy rate has helped fuel by attracting carry-trade investment, and the broader rise in Medellín’s cost of living for expats this year. If you’re weighing a COP loan, a CDT, or just budgeting a Medellín move, treat every rate above as a snapshot from late July 2026 — confirm the current number with your bank or a licensed Colombian financial advisor before you commit.

Rates and figures above reflect reporting current as of July 27, 2026, and will change after the July 31 board decision.