Interest Rates and the Economic Recovery

After the Central Bank of Costa Rica reduced the Monetary Policy Rate for the second time this year, it is estimated that the effects on the economy will be delayed.

Friday, May 24, 2019

On May 22, the Central Bank of Costa Rica (BCCR) decided to reduce the Monetary Policy Rate from 5% to 4.75%, arguing that the increase in international commodity prices and the redefinition of the basic tax basket could put upward pressure on inflation.

See "Costa Rica: Monetary Policy Rate Falls to 4.75%"

One of the purposes of this reduction in the reference rate is to push down the market rates, however, there is skepticism about the immediacy of the expected effects.

The economist Eli Feinzaig explained to Crhoy.com that "... the effect of the reduction of the MPR is uncertain because the banks not only fund themselves by resorting to the Central Bank, but also have other sources of financing whose behavior is not the same as that of the governing body in monetary policy."

Feinzaig added that "... The transmission of the benefit of the MPR reduction to the user usually takes many months. It is not something that will have an immediate effect. The big question that remains is why I hadn't reduced the rate before, knowing that inflation is under control and that the economy is stagnant and knowing that the transmission of the effect is delayed."

Do you need information about the financial sector?

Request more information:








this site is protected by reCAPTCHA and Google's privacy policy and terms of service.
Need assistance? Contact us
(506) 4001-6423


More on this topic

Costa Rica: Monetary Policy Rate Drops to 2.25%

January 2020

Arguing that in 2020 and 2021 inflation is expected to remain within the target range, although below its average value of 3%, the Central Bank reduced the monetary policy rate from 2.75% to 2.25%.

Over the next two years, the central bank's monetary policy will continue to be aimed at keeping inflation low and stable and supporting economic activity, in line with the counter-cyclical stance it adopted from March 2019, reported the Central Bank of Costa Rica (BCCR).

Brake to Monetary Policy Rate Reduction

November 2019

After lowering the rate six times between January and October of this year, in its last review the Central Bank of Costa Rica decided to maintain it at 3.25%, because the inflationary rate registers a significant slowdown.

The last reduction made to the Monetary Policy Rate (MPR) was at the end of October, when the Central Bank of Costa Rica (BCCR) reduced it from 3.75% to 3.25%, arguing that the reduction would support the incipient economic recovery process shown by production indicators.

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%.

Costa Rica: Monetary Policy Rate Drops to 2.25%

October 2015

For the seventh time this year the Central Bank has lowered the monetary policy rate from 3% to 2.25%, and projected that inflation at the end of the year will be close to 0%.

The Board of the Central Bank of Costa Rica also decided to set the gross interest rate for overnight deposits (DON) at 0.95% as of October 21.

 close (x)

Receive more news about Banking

Suscribe FOR FREE to CentralAmericaDATA EXPRESS.
The most important news of Central America, every day.

Type in your e-mail address:

* Al suscribirse, estará aceptando los terminos y condiciones


Heavy Equipment: Reps Wanted

Recognized Brazilian company of backhoe loaders, telescopic, articulated and other types of cranes looking for companies interested in representing the brand and distributing their machinery in Central America and Mexico.
The company manufactures and sells telescopic,...

Stock Indexes

(Apr 6)
Dow Jones
-5.60%
S&P 500
-5.10%
Nasdaq
-5.64%

Commodities

(Jun 1)
Brent Crude Oil
38.02
Coffee "C"
97.15
Gold
1,735
Silver
18.62