Colombia central bank sees 2027 inflation slowing to 3.7%

By Nelson Bocanegra

BOGOTA, Feb 3 (Reuters) - Colombia's central bank expects inflation to end 2027 at 3.7%, down from the 6.3% expected for 2026, it said in a report on Tuesday.

If that figure comes to pass, it would mark the first time inflation has landed within the central bank's long-term target range of 3%, plus or minus one percentage point, in six years.

The report did not give detailed predictions for 2027 economic growth, but said that next year economic activity will likely continue to slow as monetary policy is adjusted to bring inflation towards the 3% target.

The central bank warned in the report that these projections were subject to "a high degree of uncertainty" stemming from global political and trade tensions as well as domestic uncertainty about the government's fiscal policy.

On Friday, central bank chief Leonardo Villar said the bank's technical team had raised its end-2026 inflation forecast to 6.3% from a prior 4.1%, and cut estimates for economic growth to 2.6% from an earlier prediction of 2.9%.

By contrast for 2025, the team raised its economic growth forecast to 2.9% from a prior 2.6%.

Also on Friday, the central bank sharply increased its benchmark interest rate by 100 basis points to 10.25%, its first hike since April 2023 and well above the majority of market estimates.

Further out, the bank's technical team said markets are underestimating the rise in interest rates.

"On average, over an eight-quarter horizon, the path expected by analysts is lower than the trajectory implied in the macroeconomic forecast," the report added.