BOGOTA, Nov 6 (Reuters) - The technical team at Colombia’s central bank sees a more expansive interest rate next year than that predicted by the market, the team’s director said on Wednesday.
Policymakers have held the benchmark interest rate at 4.25% since April 2018 to bolster sluggish growth. Analysts have said they expect the board to hold borrowing costs until the middle of next year before raising them.
But the technical team has a slightly different estimate, the team’s director Hernando Vargas said during a presentation of the bank’s quarterly monetary policy report, in comments that marked the team’s first-ever venture into forward guidance.
“The median, the central trend that analysts have is a path for nominal interest rates that is stable for a while and in the middle of next year increases,” Vargas said.
“When we are saying the interest rate path that is behind the technical team’s estimate is more expansive, what we are saying is that our path is below it, on average,” he added.
Vargas declined to explain whether the technical team, which operates independently from the bank’s seven-member board, expects future rate cuts or longer-term holds.
The technical team’s predictions are based on lower levels of excess production capacity compared with the last quarterly report and inflation expectations that are above the 3% target for this year, Vargas said. (Reporting by Nelson Bocanegra and Carlos Vargas Writing by Julia Symmes Cobb; editing by Diane Craft)