Bibiana Taboada, a member of Colombia's central bank board, said the bank might have room to slow the tempo of future interest-rate hikes while it continues efforts to bring inflation back toward the 3% target.
Speaking in an interview at the bank's Bogota headquarters, Taboada framed the current position as one in which most of the necessary adjustment to policy rates has already been delivered. "Based on the information we have at the moment, the bulk of the adjustment would already be done," she said. She added that this situation "provided some leeway, though not much, to implement the remaining steps gradually."
Her remarks follow April's unanimous board vote to keep the key interest rate at 11.25%, a move that surprised some market analysts. The pause occurred as the central bank navigated a period of heightened political attention, including pressure from President Gustavo Petro in the run-up to the May 31 presidential election.
The episode also featured tension within official ranks. Finance Minister Germán Ávila, who holds a voting seat on the bank's board, reportedly threatened to boycott last month's meeting. Had that boycott occurred, it would have prevented the central bank from conducting monetary policy, a development that prompted some analysts to question the institution's independence.
Describing the April decision to pause further rate rises as "difficult," Taboada said that policymakers opted for transparency about their intention to avoid letting monetary policy choices be perceived as tools for political purposes during the election period. She emphasized the bank's continuing focus on returning inflation toward the 3% target.
The comments underscore the central bank's dual focus: completing its monetary tightening cycle while maintaining institutional credibility amid political scrutiny. Taboada's assessment suggests the board sees limited room to move but believes some of the tightening agenda can be executed in a more gradual fashion.
Key takeaways
- The central bank may be able to slow the pace of future rate increases, according to board member Bibiana Taboada.
- April's unanimous decision to hold the key rate at 11.25% occurred amid political pressure ahead of the May 31 presidential election.
- Internal tensions, including a threatened boycott by Finance Minister Germán Ávila, raised questions about the bank's ability to operate free from political interference.
Context and outlook
While Taboada signaled that the bulk of the policy adjustment may be complete, she also cautioned that the remaining steps should be taken gradually because leeway is limited. She reiterated the bank's objective to guide inflation back toward its 3% target.