Although The Central Bank has been reducing the monetary policy rate to boost the issuance of bank credit, the speed with which the portfolio of loans in national currency grows continues to decrease.
Official data from the country's financial system indicate that by October 2017 the portfolio of loans in local currency grew to 14%, in the same month of 2018 the rate fell to 6% and by the tenth month of 2019 the increase was just 4%.
Because of the adjustments made by the Central Bank to interest rates in recent days, financial institutions in Costa Rica will be forced to raise interest rates on savings in local currency.
Arguing that forecasts suggest that inflation in 2019 could be above the upper limit of the target range, on November 1st the Central Bank of Costa Rica (BCCR) decided to raise the monetary policy rate from 5% to 5.25%.
Claiming that in the last few months inflation expectations have increased, the Central Bank has raised the monetary policy rate from 4.75% to 5%, from February 1st.
The Central Bank argues that the price of oil has maintained a bullish behavior since July 2017. This situation, with a backlog, is transferring to the local price of fuels, with a potential transmission in the coming months towards other prices.
Entities have already registered increases in rates for loans and investments in local currency, adjusting to the increases that the Central Bank has made in the monetary policy rate and the rate for electronic deposits.
The increase has occurred in a generalized way in most of the interest rates offered by banks and financial institutions for loans and deposits in colones, days after the Central Bank raised the rate for deposits made through its electronic platform.
The main reference rate for banks fell by 0.25%, going from 5.70% to 5.45%, where it will remain at least until Wednesday April 13.
After two consecutive increases, the base rate has resumed the downward trend seen in the previous weeks and has now settled at 5.45%, where it will remain from Thursday April 7 until at least April 13.
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.
The benchmark for interests rate for loans and investments in the country will stand at 6.95% until at least Wednesday June 25.
The passive base rate indicator, which is calculated by the Central Bank reflects the average rates given for deposits by financial institutions on fixed terms of 150-210 days, will stay for one more week at the level of 6.95%.
The Central Bank of Costa Rica reported that the main benchmark for loans will remain at that level until at least January 15.
Elfinancierocr.com reports: "The information represents an increase of 0.05 percentage points from its last recorded level, because the indicator started the year at a rate of 6.50%."
From November 28 until December 4 the base rate will go from 6.60% to 6.55%.
Elfinancierocr.com reported that "it was on 25 July when the rate reached its present level (6.55%) for the first time so far this year. Since then, the rate has remained fluctuating between 6.60% and 6.50%. "
"The passive base rate is used as a guide for most loans in colones granted by financial institutions and is calculated based on the weighted performance rates of private and public banks and other financial intermediaries."
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