Geopolitical Uncertainty and Inflation Target: Colombia 2021–2024

Abstract

This article examines how geopolitical uncertainty affects the credibility of the 3 % inflation target set by Banco de la República between 2021 and 2024. Using an interpretive approach grounded in official sources, the study combines the Geopolitical Risk Index (GPR) with inflation expectations drawn from monetary policy statements. The analysis identifies four geopolitical episodes in the 2021–2024 cycle, two of which exceed the acute-risk threshold: March 2022 (GPR = 318.95 points; z = +4.60 σ) and October 2023 (GPR = 197.89 points; z = +2.05 σ). In both cases, the rise in the GPR preceded a rebound in inflation expectations by 40 to 60 days, temporarily widening the gap relative to the target. Even so, expectations—despite upward pressure—did not permanently de-anchor, which points to a partial anchor sustained by the central bank's reputational capital. The findings show that monetary authority communications framing shocks as external in origin, and reaffirming an ongoing commitment to the target, are associated with a faster reconvergence of expectations. The study contributes evidence from Colombia on the interaction between global risks and monetary credibility, and highlights communication transparency as a policy instrument in its own right for emerging economies exposed to external shocks.