Monetary Policy Rate Falls Again

Arguing that in the international context a high uncertainty associated to the commercial tensions between the U.S. and China prevails, the Central Bank of Costa Rica decided to lower for the fifth time so far this year the Monetary Policy Rate, this time to 3.75%.

Thursday, September 19, 2019

For the monetary authority, the tension between the two world economic powers has led to a slowdown in trade flows and growth projections in our main trading partners.

You may be interested in "Expectation for Changes in Monetary Policy

From the Central Bank of Costa Rica statement:

San José, September 19, 2019. The Board of Directors of the Central Bank of Costa Rica (BCCR), in session of September 18, 2019, agreed to reduce the Monetary Policy Rate (MPR) by 25 basis points (b.p.), to place it at 3.75% annually from September 19, 2019.

The Central Bank adjusts its TPM prospectively, based on the expected evolution of inflation and its macroeconomic determinants. In addition, the international environment is analyzed.

In the international context, there is a high degree of uncertainty associated with the trade tensions between the United States and China, which has led to a slowdown in trade flows and growth projections in our main trading partners.

Faced with this context, 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. In particular, the U.S. Federal Reserve System reduced the target range for the federal funds rate by 25 b.p. to 1.75%-2.00% at the current September 17-18 meeting, which adds to the 25 b.p. decrease last July. Similarly, the European Central Bank and other central banks, such as those of Brazil, Mexico, Chile, Peru, New Zealand, India, Thailand and Australia, have also made downward adjustments to their monetary policy interest rates.



More on this topic

Guatemala: Prime Rate Drops to 2.25%

March 2020

Arguing that the impact of covid-19 will be significant in the context of global and local economic slowdown, the Central Bank decided to lower the leading interest rate of monetary policy by 50 basis points, from 2.75% to 2.25%.

The decrease in the leading interest rate of the monetary policy seeks to help contain the deceleration of the economic activity and employment in the short term and reduce the cost of credit, informed the Banco de Guatemala.

Monetary Policy Rate is set at 5.75%

November 2019

Arguing that the inflationary expectations of the economic agents are still close to the upper limit of the tolerance range with a decreasing tendency, the Central Bank of Honduras decided to keep the monetary policy rate at the same level.

From the BCH statement:

Tegucigalpa MDC, November 13, 2019. In the ordinary session No.169/11-11-2019 held on November 11, 2019, the Open Market Operations Commission (COMA) of the Central Bank of Honduras (BCH) analyzed the current economic conditions and the most recent perspectives internally and externally. In the international environment, the growing commercial and geopolitical tensions have aggravated the uncertainty, generating a deceleration in the commercial flows and lower perspectives of world economic growth for 2019 and 2020.4

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.

Honduras: Monetary Policy Rate Drops to 6.50%

March 2015

In order to sustain the pace of local economic growth, the Central Bank has decided to reduce the monetary policy rate from 6.75% to 6.50%.

From a statement issued by Banco Central de Honduras:

The Committee on Open Market Operations (COMA) at the Central Bank of Honduras (BCH), in regular session No.117 on March 17, 2015, analyzed the recent performance and prospects for the main macroeconomic and financial indicators, both at the national and international level.

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