Costa Rica: Monetary Policy Rate Falls Again

Arguing that there are deflationary pressures and that the unemployment rate remains high, the Central Bank reduced the Monetary Policy Rate from 4.5% to 4%.

Tuesday, July 23, 2019

This would be the fourth reduction in the Monetary Policy Rate made by the Central Bank of Costa Rica (BCCR) so far this year, since at the beginning of 2019 was at 5.25% and is currently reduced to 4%.

The BCCR statement explains that this reduction in the reference rate "... complements the stimulus measures to credit conditions taken in recent months."

According to the institution, deflationary forces persist in the Costa Rican economy (i.e., pressing down inflation), for example, the low pace of economic activity, resulting in a negative output gap (i.e., at a level of production below the potential of the Costa Rican economy), high levels of unemployment, and low growth of monetary aggregates and credit to the private sector.

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More on this topic

Costa Rica: New Monetary Policy Rate Decrease

June 2019

Arguing that deflationary forces persist and that a low rate of economic activity is reported, the Central Bank decided to reduce the Monetary Policy Rate to 4.50%.

This is the third reduction made by the Central Bank of Costa Rica (BCCR) so far this year, since at the end of March it decided to reduce the monetary policy rate from 5.25% to 5% and in May from 5% to 4.75%.

Economic Recovery Measures Are Not Enough

June 2019

The effects of the reduction in the Monetary Policy Rate and the lowering to 12% of the minimum legal reserve for banks will take months to be perceived, and without other parallel actions that impact the business sector more quickly and effectively, the economic reactivation of Costa Rica will not be possible in the short term.

According to the latest report of the Central Bank of Costa Rica (BCCR), when comparing the level of economic activity recorded in March this year with the same month of 2018, it is observed that most economic activities slow down their growth, which was reflected in the slowdown of the general indicator. See full report.

Costa Rica: Monetary Policy Rate Falls to 4.75%

May 2019

Arguing that the rise in international commodity prices and the redefinition of the basic tax basket could put upward pressure on inflation, the Central Bank reduced the Monetary Policy Rate to 4.75%.

This is the second reduction made by the Central Bank of Costa Rica (BCCR) so far this year, since at the end of March it decided to reduce the monetary policy rate from 5.25% to 5%.

Guatemala: Lider Rate Drops to 3.25%

June 2015

The global economy's slow recovery is one of the reasons behind the reduction from 3.50% to 3.25% in the monetary policy rate.

From a statement issued by the Bank of Guatemala:

THE MONETARY BOARD IS REDUCING BY 25 BASIS POINTS THE LEADING MONETARY POLICY INTEREST RATE

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