US Dollar/Colombian Peso FX Spot Rate

Colombia's central bank raised its policy rate by 25 basis points to 12.25% on the 30th, citing persistent inflationary pressures. The decision went against the broad market consensus. The 25 basis point hike was supported by four of the seven board members, two favored holding steady, and one argued for a 50 basis point increase. In a statement, the board noted that headline inflation rose again in August to 6.2% year-on-year, saying the main upward pressures came from food and regulated prices, and that the El Niño phenomenon could continue to put upward pressure on food and regulated price inflation. August inflation was more than double the central bank's long-term target of 3%. In a Reuters poll conducted last week, 19 of 27 analysts expected the policy rate to be held at 12% to gauge the economic impact of August's earthquake, six expected a 50 basis point hike, and the remaining two expected a 25 basis point increase. The board also noted that international financial conditions have tightened somewhat amid expectations that central banks in developed countries will step up monetary tightening, and that economic growth may be slowing.