LatinNews Daily - 30 June 2025

*Colombia’s central bank (Banrep) has held its benchmark interest rate at 9.25%, after a 25 basis point cut in April that followed two consecutive pauses to its rate-cutting cycle in March and January. In a statement explaining its decision, Banrep said that it “maintains a cautious approach to monetary policy that recognises newly identified risks to the convergence of inflation with the target rate”. The bank noted that annual inflation fell slightly to 5.1% in May, down from 5.2% in April but above the target of 3%. However, it also highlighted that “the increase in the fiscal deficit forecast for 2025 and the following years constitutes a challenge for the sustainability of the public finances and reduces room for manoeuvre in the relaxation of monetary policy”. Concern over Colombia’s fiscal policy following the government’s decision on 13 June to suspend the ‘fiscal rule’, which limits borrowing relative to income, also caused two international credit ratings agencies to downgrade Colombia on 26 June, with Moody’s downgrading the country from Baa2 to Baa3 and Standard & Poor’s (S&P) downgrading it from BB+ to BB.

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