Board members of Colombia's central bank are expected to opt for a smaller rate cut when they meet on Friday on uncertainty around inflation, the nation's fiscal situation and policy moves by the U.S.

The Federal Reserve will almost certainly begin 2025 by keeping interest rates on hold at between 4.25 to 4.5 per cent.

Colombia's central bank held the benchmark interest rate at 9.50% on Friday, surprising the market, which expected policymakers to vote for a second consecutive 25 basis point cut. The decision was backed by five members of the seven-member board.

The bank’s monetary policy committee increased the benchmark rate by a full percentage point to 13.25%.

The Federal Reserve on Wednesday hit pause on interest rate cuts in its first key decision of President Donald Trump’s second term.

The nation's central bank held interest rates steady in its first decision of the year. On Wednesday, the Federal Open Market Committee announced that it would maintain the Federal Reserve's target rate following a series of rate cuts at the end of 2024.

The U.S. dollar was firmer against major currencies on Wednesday as investors awaited the Federal Reserve's monetary policy decision, as well as clues on the trajectory of interest rates this year. The Fed is widely expected to hold interest rates steady at the end of its first policy meeting of the year on Wednesday.

The Fed signaled as much at its last meeting in December, when the central bank delivered an interest cut, but hinted that it would take its foot off the gas. Stocks tumbled on th

The US Federal Reserve also noted that inflation remains "somewhat elevated, and economic outlook is uncertain".