(Adds rate decision, quotes, board chief leaving post)
BOGOTA, Oct 30 (Reuters) – Colombia’s central bank unanimously held its benchmark interest rate steady at 1.75% on Friday, meeting market expectations and ending seven months of rate cuts meant to buoy the economy amid a coronavirus lockdown.
All 13 analysts in a Reuters survey this month forecast the seven-member board would hold the rate at 1.75%, as consumer prices stop falling and consumption normalizes.
“It was considered prudent to maintain the current position while waiting for new information on the shocks and the evolution of the variables which affect policy reaction,” the central bank’s board said in a statement.
“The relaxation of isolation measures, the fiscal support for households and companies, lower interest rates and the ample liquidity provided by the central bank are facilitating conditions for the recovery of economic activity,” the board added.
The pause in the rate may continue for several months, board chief Juan Jose Echavarria said during a virtual press conference announcing the decision.
Echavarria said in a separate statement he will not seek re-election and will leave the board when his term expires at the end of this year.
The Colombian government forecasts the economy will contract 5.5% this year because of the pandemic, while the central bank predicts a less optimistic contraction of between 6% and 10%.
The recent rate cuts, which began in March, took borrowing costs to a historic low, but analysts have said monetary policy will now lean toward controlling potential increases in inflation.
Consumer price growth was 0.32% in September, taking 12-month price growth to 1.97%. Both figures were well above market expectations.
Analysts in a Reuters poll this week expect inflation to reach 1.84% at the close of this year, up from the 1.7% predicted in September’s poll but well below the long-term target rate of 3%. (Reporting by Nelson Bocanegrea, Oliver Griffin and Julia Symmes Cobb Writing by Julia Symmes Cobb; Editing by Grant McCool and Leslie Adler)