Colombia Markets Jolted as 23% Wage Boost Fuels Rate Hike Bets

Colombian swap rates soared Tuesday after President Gustavo Petro announced a 23% increase in the minimum wage, stoking bets that the central bank will have to hike interest rates to combat the policy’s impact on prices.

Short-term interest rate swaps, a gauge of investor sentiment about monetary policy, rose by as much as 69 basis points, reaching the highest levels since March 2023 as markets digested Petro’s Monday evening announcement.