Costa Rica: New Monetary Policy Rate Decrease

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%.

Thursday, June 20, 2019

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%.

See "Monetary Policy Rate goes Down to 5%" and “Costa Rica: Monetary Policy Rate Falls to 4.75%”.

From the BCCR press release:

San José, June 19, 2019. The Board of Directors of the Central Bank of Costa Rica, in session of June 19, 2019, agreed to reduce the Monetary Policy Rate by 25 basis points, to set it at 4.50% annually. In addition, it agreed to reduce the gross interest rate of overnight deposits (DON) by 19 basis points to 2.66% annually. Both changes will apply from June 20, 2019.

In its decision, the governing body took into account the following considerations:

The Central Bank has as a priority objective to maintain a low and stable inflation, and as one of its subsidiary objectives "to promote the orderly development of the Costa Rican economy, in order to achieve the full occupation of the productive resources of the Nation, trying to avoid or moderate the inflationary or deflationary tendencies that may arise in the monetary and credit market" (article 2 of its Organic Law, Law 7558).

Read full press release (In Spanish).

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More on this topic

Costa Rica: Monetary Policy Rate Falls to 3.25%

October 2019

Arguing that the reduction would support the incipient economic recovery process shown by production indicators, the Central Bank decided to lower the Monetary Policy Rate for the sixth time this year.

The central banks of some advanced and emerging economies have relaxed their interest rates, which expands the space for a countercyclical monetary policy in Costa Rica, according to the Central Bank's analysis.

Costa Rica: Monetary Policy Rate Falls Again

July 2019

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%.

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%.

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%.

Monetary Policy Rate goes Down to 5%

March 2019

Arguing that there are factors that could push inflation down, in Costa Rica the Central Bank decided to reduce the monetary policy rate from 5.25% to 5%.

The inflation forecast models of the Central Bank suggest that this would converge to the target range from the second quarter of 2019 and would remain around or below the midpoint of that range during the horizon of the 2019-2020 macroeconomic programming, informed the Central Bank of Costa Rica (BCCR).

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