Definition and Objective of Monetary Policy

Monetary policy in Colombia comprises the actions taken by Banco de la República (the Central Bank of Colombia) to comply with its constitutional mandate to maintain the purchasing power of the currency in coordination with the general economic policy.

To fulfil this constitutional mandate, Banco de la República follows an inflation targeting strategy in a flexible exchange-rate regime that seeks to maintain a low and stable inflation rate and achieve the highest possible sustainable level of output and employment. Under this scheme, monetary policy actions are aimed at keeping future inflation within the 3.0% target set by the Board of Directors of Banco de la República (the Central Bank of Colombia).