The purpose of this measure is to continue to strengthen the monetary and credit policy actions that were adopted by the Central Bank of Honduras this year. By reducing the interest rate, it will continue to stimulate investment and generate jobs in all sectors.
According to the website Laprensahn.com, Ana Cristina Mejía de Pereira, analyst from the organization Fundemos and former president of the Central Bank of Honduras (BCH, acronym in Spanish), commented that “with this measure the passive bank rates are affected, which means that the interest rates on deposits will be negatively impacted.”
The basic interest rate has been raised to 5% in order to minimize the external pressure on prices.
At a time when prices of raw materials is on the rise internationally, the Central Bank of Honduras has increase by 5% the monetary policy rate (MPR), an instrument which aims to influence interest rates on the market.
The Monetary Board reduced the monetary policy's leading rate by 0.5 base points, from 6.25% to 5.75%.
According to Antonieta de Bonilla, chairperson of the Monetary Board, the measure seeks to reduce the cost of bank credit.
Lorena Alvarez in her article in Elperiodico.com.gt, published statements by the chairperson: "The leading rate was reduced by 0.50 base points because inflation expectations have been reduced and it is anticipated to end this year at 5%."
This instrument, which the authorities use to send signals to the market, was increased from 9% to 10%.
"The measure was adopted taking into consideration that the Central Bank will continue with a restrictive monetary policy to reduce the rhythm of growth of prices in the local market and to contribute toward achieving the desired inflation," said the bank in a statement.
The Monetary Board believes that there are now conditions, limited and temporary, to reduce the monetary policy leading interest rate.
A statement from the Bank of Guatemala reads:
MONETARY BOARD REDUCES LEAD POLICY RATE BY 50 BASIS POINTS
The Monetary Board, at its meeting today decided to reduce the level of the leading interest rate for monetary policy by 50 base points from 5.50% to 5.00%, based on comprehensive analysis of the foreign and domestic situation, after reviewing the Inflation Risks Balance, and the results of the mechanical shift of semi-structural Macroeconomic Model for June and orientation of the indicative variables of monetary policy.
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