Costa Rica: Monetary Policy Rate Rises to 4.75%

For the sixth time in the year and arguing future inflationary pressures, the Central Bank has raised the monetary policy rate to 4.75% as of November 30.

Friday, December 1, 2017

Consulted on the matter by Nacion.com, economist Alberto Franco said that "...Before the absence of clear signs of greater inflationary pressures and a slowdown in local economic activity in recent months, this measure, in my opinion, could seek, fundamentally, to preserve the premium for investing in colones, in the face of a very likely increase in the reference rate of the Central Bank of the United States, the FED, in this next month of December."

For his part, economist Norberto Züñiga thought that   "...'The Central Bank probably wants to anticipate and avoid what happened to it at the beginning of the year when it was left behind and there was a strong devaluation and loss of international monetary reserves.'

From a statement issued by the Central Bank:

The Board of Directors of the Central Bank of Costa Rica, in article 6 of the minutes of session 5800-2017, held on November 29, 2017, decided, unanimously and firmly to: 

1.  Set the Monetary Policy Rate (MPR) at 4.75% per annum, as of November 30, 2017.   

2.  Maintain the gross interest rate of one-day deposits (DON) at 2.85% per annum, as of November 30, 2017.   

3.  Establish that, in the Integrated Liquidity Market, as of November 30, 2017:   
a. The interest rate of the permanent one-day credit facility will be equal to the MPR plus 100 basis points.   
b. The interest rate of the permanent one-day deposit facility will be equal to the TPM minus 100 basis points. 

Read full report (in Spanish).

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