(Bloomberg) — Colombia’s government will increase the nation’s minimum wage by 12% next year, eliminating a key source of uncertainty for central bankers who have been divided over interest rate cuts.

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The government decided that base salaries will rise to 1,300,000 pesos ($335.45) Labor Minister Gloria Ines Ramirez said Friday in remarks broadcast on social media platform X.

The hike comes days after Colombian central bankers relaxed monetary policy for the first time since 2020, lowering rates to 13% in a split decision. Minority members voted to keep borrowing costs unchanged, citing uncertainty and potential inflation risks from minimum wage talks. In the meeting minutes, they also emphasized the high degree of price indexation in the economy.

Read more: Colombia Starts Easing Cycle With Cautious Interest Rate Cut

Annual inflation slowed to 10.15% in November, a figure that’s still the highest among regional peers and more than twice the upper bound of the 2% to 4% target range.

Colombia has joined Latin American nations including Brazil, Chile and Peru in lowering borrowing costs as inflation eases and economic growth cools.

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