Costa Rican roller-coaster on interest rates

Interest rates in Costa Rica have risen by 1.25 percentage points in recent weeks. The increase follows a drop over the previous two and a half years from 15.25% to 4.25%.

Monday, June 30, 2008

At its last meeting, the central bank board said current interest rates were incompatible with the need to tighten the money supply. It redefined the reference rate as the rate on 24-hour loans and raised it to 8 percent.
For the last 12 months, high inflation has made Costa Rican interest rates negative in real terms and thus a disincentive to investment.

More on this topic

Basic Rate Rises to 7.75% in Costa Rica

December 2010

Starting Thursday, December 9, the passive base rate will rise a half percentage point.

This is the third consecutive increase by the indicator, thus reaching the value it had on November 24th.

"Although this is a new increase, the indicator is not yet near its yearly peak, which is 8.50%, recorded last May," Edgar Delgado in his article at Elfinancierocr.com reports.

New hike in Costa Rican interest rates puts banks on alert

June 2008

A new increase in interest rates has put Costa Rica's banks on a contingency footing.

Two banks – Nacional and de Costa Rica – have cut back on credits, while others are on standby for a possible change in strategy.
Several economists say that the impact of dearer money could be considerable, leading to a growth in bad debts. But banks remain optimistic; existing portfolios are unlikely to be affected, they say.

Higher interest rates forecast for Costa Rica

May 2008

A period of low interest rates in Costa Rican colons appears to be coming to an end as analysts foresee increases in the coming months.

Some banks are already using higher lending rates to slow down the growth in credit. "Higher rates will give the central bank its most effective weapon in controlling inflation," said Fernando Estrada, a trader with Mercados Internacionales.

Costa Rica's state-owned banks raise rates for credits

May 2008

State-owned banks in Costa Rica raised lending rates in colons by 1-1.5 percentage points in the last week of April and by half a percentage point for credits in dollars, according to central bank statistics.

Private-sector banks, meanwhile, have kept their lending rates steady.

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