Costa Rica's interest rates may hit 12.6%

Costa Rica's economy-watchers see more inflation on the horizon and the consensus is that it may hit 12.6 percent per year, with interest rates following suit, according to a survey taken by the Central Bank.

Friday, July 25, 2008

In the last few weeks interest rates have moved sharply higher, reversing a downtrend that had been in place until April of this year.
Even with present interest rates, the real rate of return on bonds is negative after taking inflation into account.
The Central Bank is struggling to maintain the current exchange rate because if it goes down it could trigger yet another round of higher prices in the local currency.

More on this topic

Base Rate in Costa Rica Hits Highest Point this Year

July 2012

The Passive Base Rate has increased by 50 base points and now stands at a level of 10%.

The indicator has again hit the highest value reached in 2012, having been at the same value between 10 and 22 May 2012 and between May 31 and June 13, 2012.

The passive base rate is calculated by the Central Bank and is a weighted average interest rates of savings in colones for periods ranging from 150 days (5 months) and 210 days (7 months).

Costa Rica: Basic Rate down to 6.75%

October 2010

The passive low base rate falls for the second consecutive week, from 7.50% to 6.75%.

Two weeks ago it temporarily located at 8.25%, showing the vulnerability of the indicator and transient conditions of liquidity as well as sector-specific needs, with the aggravation that this rate is used as the main reference for credit grants, so it has direct effect on financial planning for many businesses and families.

Costa Rica: Passive Base Rate Drops to 9.10%

January 2013

Since late December last year, the Central Bank of Costa Rica has applied a new methodology for calculating the passive base rate.

From the website of the Central Bank of Costa Rica (BCCR):

Passive Base Rate

A. Definition

The base rate is a weighted average of the interest rates in colones on gross collections by financial intermediaries negotiated by domestic residents and the interest rates for deposit instruments of the Central Bank and Ministry of Finance negotiated both in the primary and secondary market, each corresponding to periods of between 150 and 210 days.

Basic Rate Keeps Falling in Costa Rica

October 2009

The Basic Passive Rate dropped a quarter of a percentage point to 9%, its fourth consecutive decrease.

After this reduction, the Basic Passive Rate is now at its lowest level since September 2008.

"This new decrease coincides with a modification in the rates paid by Central Bank securities on Friday", reports Elfinancierocr.com.

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