Honduras: Cost of Money Increases

For class "A" businesses, the lending rate in domestic currency now stands at 14.7% and 7.2% for loans in foreign currency.

Wednesday, July 18, 2012

A 100 basis point increase in the Monetary Policy Rate (MPR) decreed by the Central Bank of Honduras on 14 May, is the main reason behind this increase.

After the hike in the monetary policy rate, the response from the Honduran Association of Banking Institutions (Ahiba) was given immediately: "the action of the board of BCH has resulted in increases in interest rates, increasing borrowing costs and reducing the circulating currency, thereby affecting the availability of credit for the private sector. "

"Central Bank President, Maria Elena Mondragon said increasing the MPR would encourage savings without making the cost of borrowing more expensive. However, the reality for users of the financial system has been different", reported Elheraldo.hn



More on this topic

Honduras: Lending Rate Goes Down 4.5%

April 2020

In recent weeks, the country's financial system has seen a considerable drop in the lending rate on new loan operations, which is partly explained by the reduction in the Monetary Policy Rate.

According to reports from the Central Bank of Honduras (BCH), between March 9 and April 10, 2020, the rate fell from 14.81% to 10.31%. This fall is being recorded in the context of the health crisis caused by the outbreak of covid-19.

Honduras: Monetary Policy Rate Drops to 6.75%

February 2015

The Central Bank of Honduras has reduced the monetary policy rate by 0.25%, setting it at 6.75%, which has created the expectation of lower interest rates in the domestic market.

From a statement issued by Banco Central de Honduras:

The Committee on Open Market Operations (COMA) at the Central Bank of Honduras (BCH by its initials in Spanish), in regular session No.116, analyzed recent performance and prospects for the main macroeconomic and financial indicators, both nationally and internationally.

Costa Rican Banks Look for Dollars Abroad

October 2012

High interest rates, the product of the Treasury’s steady increase in financing with debt, is leading banks to seek funds abroad.

In the country the average lending rate in dollars is about 11%, considerably higher than in the United States, where the average is 4%.

This gap is the result of higher government borrowing in dollars, which has increased its debt in this currency by 165% year on year.

Honduras' Central Bank raises interest rates to 8.5%

June 2008

The Central Bank of Honduras, battling inflation, felt obliged to increase its leading interest rate by 0.5 percent to 8.5.

The goal is to make the currency more attractive for institutional investors and to compete with other financial institutions.
The Monetary Policy Rate fixes the trend of other interest rates in the financial market, but it also increases interest rates being paid to banks by Honduran borrowers.

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