BOGOTA, Aug 26 (Reuters) – Colombia central bank chief Leonardo Villar said on Wednesday that the bank’s models suggest inflation in the country will approach the 3% target by mid-2028.
In early August, the central bank’s technical team saw inflation at 4.3% at the end of 2027, up from a previous projection of 3.7%, according its quarterly monetary policy report.
Latin America’s fourth-largest economy has failed to meet its inflation target since 2021, and as of the end of July, annual inflation stood at 6.03%.
“Growth in domestic demand, such as we have seen recently—which far exceeds the growth in domestic production—creates upward pressure on prices and hinders efforts to control inflation, making the monetary authorities’ job very complex,” Villar said at a banking conference in Cartagena.
Speaking at the same event, Colombia’s Vice-Minister of Finance, Juan Sebastian Betancur said that he did not believe it was “feasible” for the country to return to compliance with its fiscal rule in the short term due to the deterioration of the country’s public finances.
In June 2025, the government suspended compliance with the fiscal rule for a period of three years.
The fiscal rule is a government mechanism that was introduced in Colombia in 2011 to set limits on government spending and borrowing, as well as to ensure the sustainability of public finances and macroeconomic stability in the medium and long term.
“I am acutely aware of the importance of a medium-term fiscal anchor,” Betancur said. “We are working toward that goal,” he added.
(Reporting by Nelson Bocanegra; Writing by Raul Cortes; Editing by Iñigo Alexander and Kylie Madry)
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