Colombia's central bank raised rates by surprise: on Wednesday, September 30, Banco de la República lifted its policy rate from 12% to 12.25%, when most analysts expected a hold. The reason is inflation, which climbed again to 6.2% in August. The Colombian peso is firmer: today's official reference rate (TRM), for Thursday, October 1, is 3,312.84 pesos per dollar, 28 pesos below yesterday's.
Banco de la República's decision in numbers
| Actual | Expected | Previous | |
|---|---|---|---|
| Policy rate | 12.25% | 12.00% | 12.00% |
| Board vote | 4 for +25 bp; 2 for a hold; 1 for +50 bp | — | — |
| Cumulative hikes in 2026 | 300 basis points (from 9.25%) | — | — |
| Annual inflation (August) | 6.2% | — | — |
| Expected inflation for December 2026 | 6.8% | — | — |
| TRM (October 1) | 3,312.84 | — | 3,341.23 |
It was a split decision. Four of the seven board members voted for the 25-basis-point hike, two preferred to leave the rate unchanged and one called for a bigger 50-point move. It is the first rate decision under Colombia's new government, and Finance Minister Miguel Gómez described it as "moderate" and necessary.
Why is Colombia's central bank raising rates?
Because inflation is accelerating again and moving away from the 3% target. In August, every major price group was above 6%:
- Services: 7.2% year on year.
- Regulated services (utilities, fuel, transport): 6.8%.
- Food: 6.1%.
- Core inflation (excluding food and regulated items): 6.1%, its highest in a year.
What worries the board most is expectations: analysts believe inflation will end 2026 at 6.8%, and the forecast keeps rising month after month. When people expect more inflation, they raise prices and wages, and inflation becomes harder to bring down.
The problem is that the economy is starting to cool. Unemployment rose to 9.4% in August, its first increase in two years, and economic activity grew only 1.1% year on year in July, with manufacturing down 2.3%. Second-quarter GDP still grew 3.4%. That is why three board members did not back the hike as approved: two saw it as unnecessary and one as too small.
What happens to the Colombian peso after the hike?
The dollar is falling and the peso is gaining ground. Higher rates make Colombian assets more attractive: a Colombian bond or time deposit pays more, and that draws dollars into the country.
- Today's TRM is 3,312.84 pesos, 28.39 below yesterday's (3,341.23), a 0.85% drop.
- In Wednesday's session, the dollar opened at 3,305 pesos, hit a high of 3,330 and a low of 3,295, and closed at 3,311.
- In the international market, USD/COP trades around 3,315 this morning.
The hike comes at a delicate moment for the peso. In 2026 it had gained more than 19% against the dollar, the biggest rise among 21 emerging-market currencies, but in the week after the Fed's September hike (from 3.50–3.75% to 3.75–4.00%) the dollar recovered about 164 pesos. The rate gap between Colombia and the US is now more than 8 percentage points, one reason the peso still attracts carry-trade money.
But the peso does not depend only on its own central bank. This week the dollar is strengthening worldwide because the US 10-year Treasury yields 5.33%, its highest since 2002. We cover all the drivers in what moves USD/COP and USD/CLP and in why the dollar is rising against Latin American currencies.
Key USD/COP levels
| Level | Price (COP) | Why it matters |
|---|---|---|
| Resistance 3 | 3,368 – 3,386 | Latest 4-hour and 1-hour highs, and the daily upper Bollinger band |
| Resistance 2 | 3,337 – 3,353 | Yesterday's bearish gap and the highest-volume price of the last 24 hours |
| Resistance 1 | 3,322 – 3,330 | 1-hour 20 average, session volume-weighted average price and yesterday's high |
| Current price | 3,315 | — |
| Support 1 | 3,295 – 3,306 | Yesterday's low, the latest 1-hour and 4-hour swing lows and the 3,300 round number |
| Support 2 | 3,226 – 3,238 | 20-day and 50-day averages and the last daily swing low |
| Support 3 | 3,140 | 4-hour lower Bollinger band |
USD/COP moves about 47 pesos a day on average. On the daily chart, price is still below the 200-day average (3,502): the 2026 trend of a strong peso is intact, even though September's rebound has tested it.
USD/COP scenarios
Bearish scenario (strong peso): if USD/COP loses 3,295 on a daily close, the rate hike would take over and the next target would be the 20-day and 50-day averages at 3,226–3,238. Most likely if the global dollar eases: a soft payrolls report on Friday or lower US yields.
Bullish scenario (the global dollar rules): if it reclaims 3,330, it would head back to 3,337–3,353, where it traded before the decision; above that, 3,368–3,386. Most likely with a strong ISM or payrolls and US yields at new highs.
Invalidation: the bearish scenario is void on a daily close above 3,353.
Today's and tomorrow's US data (ISM at 10:00 ET and nonfarm payrolls on Friday at 08:30 ET) may move the pair more than the decision itself. Both are in today's economic calendar.
What does the hike mean for Colombia?
- More expensive credit: banks usually pass hikes on to consumer loans, credit cards and variable-rate mortgages in the following weeks.
- Better-paid savings: time deposits and high-yield savings accounts tend to pay a little more.
- A slightly cheaper dollar: if the peso strengthens, imports and travel get cheaper, although the dollar depends mostly on what happens in the US.
Colombia joins the central banks hiking because of expensive energy: the Fed moved in September and the Reserve Bank of Australia did so on Tuesday. We explain it in the RBA's hike to 4.60%.
Frequently asked questions
What is Colombia's interest rate now?
It is 12.25%, after a 25-basis-point hike on September 30, 2026. So far this year, Banco de la República has raised rates by 300 basis points, from the 9.25% at which 2026 began.
When is Banco de la República's next meeting?
The next rate decision is on October 30, 2026, and the last one of the year on December 18. The minutes of the September meeting, with the reasoning behind each vote, are published on October 5.
Why is the dollar falling in Colombia today?
Because the rate hike makes Colombian peso assets more attractive. The TRM for October 1 fell to 3,312.84 pesos, 28 below the previous day. Even so, the dollar remains strong globally because of high US Treasury yields.
Will Colombia keep raising rates?
It will depend on inflation. With expectations at 6.8% for December and one vote for a 50-point hike, another move cannot be ruled out, but rising unemployment (9.4%) and a divided board point to small steps.
