The board voted 4-3 to increase the benchmark interest rate by 25 basis points to 2.0%; the three dissenting board members voted for a 50 basis point increase.

This decision was based on the following considerations:

• A resumption of economic activity interrupted by roadblocks and a third wave of COVID-19 in the second quarter was restored in the third quarter. Stronger demand both domestically and among Colombia’s main trading partners should encourage economic dynamism for the rest of the year, with GDP growth now projected at 8.6% in 2021 and 3.9%. % in 2022. Higher-than-expected forecasts suggest excess production capacity may be shut down faster than expected.

• Annual inflation continued its upward trajectory in August, reaching 4.4%; core inflation (CPI excluding food and regulated products) reached 2.3%. This increase is largely explained by national and international supply shocks which should be transitory but whose durations may vary. The partial reversion of certain price relief measures, in a context of more dynamic demand and reduction in overcapacity, would also be a factor.

• The persistence of external shocks, indexation to higher inflation rates on certain prices, and a faster than expected closure of the output gap have led technical staff to revise their inflation forecasts upwards to 4. , 5% for the end of 2021 and 3.5% for the end of 2022. Expected inflation has increased, even if in the medium term it remains close to the target. The increased persistence of supply shocks and their upward effects on prices could push expectations away from the target rate.

• The more positive performance of demand relative to supply has translated into an increase in the current account deficit, which, according to the latest estimates from technical staff, will reach 5.0% of GDP by the end of 2021, higher deficit of 3.6% in 2020 This is largely explained by a greater trade imbalance in goods and services associated with a significant increase in imports compared to exports. Capital flows, including foreign investment, will be the main source of finance, underscoring the importance of macroeconomic stability.

• In reviewing the balance of risks, the Board of Directors was aware of the significant uncertainty surrounding these forecasts, as well as the remaining risk that the COVID-19 pandemic will worsen again and affect the resumption of domestic and international demand. . The Board of Directors also recognized that the risk of deviation of expected inflation from target becoming a persistent phenomenon that could lead to indexation at higher inflation rates.

#AEstaHora Transmisión en directo de la rueda de prensa de la #JuntaBanrep del mes de Septiembre. of Banco de la República – Colombia to Vimeo.