In a context where economic activity continued to show moderate growth at the end of 2019, the Central Bank decided that as of February 10th the Monetary Policy Rate would be reduced from 5.5% to 5.25%.
From the Central Bank of Honduras press release:
February 5th, 2020. In the ordinary session No.171 held on February 4, 2020, the Open Market Operations Commission (COMA) of the Central Bank of Honduras (BCH) analyzed the current economic conditions and the most recent domestic and external perspectives. In the international environment, global growth projections for 2020 and 2021 were revised downwards by the International Monetary Fund, as a result of lower growth prospects in the United States of America (USA), the Euro Zone, basically Germany and Spain, as well as some emerging countries, including India, Mexico and Chile. The above is added to the world uncertainty for the economic effects that could be derived from the propagation of the coronavirus.
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
Arguing that core inflation remains below total inflation, the BCH decided to maintain the Monetary Policy Rate at the same level.
From the BCH statement:
May 9th, 2019. In ordinary session No.164 held on May 6, 2019, the Open Market Operations Commission (COMA) of the Central Bank of Honduras (BCH) analyzed the current situation and prospects of the main macroeconomic and financial indicators, at the national and international levels.
Arguing that the medium-term forecasts indicate that the inflation trajectory will remain above the tolerance range, the BCH decided to raise the Monetary Policy Rate by 0.25%.
From the BCH press release:
January 4th, 2019. In ordinary session No.158-10-12/2018, the Open Market Operations Commission (COMA) of the Central Bank of Honduras (BCH), analyzed the recent evolution and perspectives for the main macroeconomic and financial indicators, at domestic and international levels.
Considering the international context and the recent performance of the national economy, the Central Bank has decided to reduce the monetary policy rate from 5.75% to 5.50%.
From a statement issued by the Central Bank:
The Commission on Open Market Operations (COMA) at the Central Bank of Honduras (BCH), in ordinary meeting No.128 on June 14, 2016, discussed the recent developments and prospects for the main macroeconomic and financial indicators, at the national and international level.
The Central Bank has reduced the benchmark rate by 50 basis points as a result of stable performance shown by the economy.
The Board of the Central Bank of Honduras reduced, from 28 March 2016, the monetary policy rate by 50 basis points, fixing it at 5.75%.
From a statement issued by the Central Bank:
The Commission on Open Market Operations (COMA) at the Central Bank of Honduras (BCH), in ordinary meeting No.126 on March 15, 2016, discussed the recent developments and prospects for the main macroeconomic and financial indicators, both at the national and international level.
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.
For class "A" businesses, the lending rate in domestic currency now stands at 14.7% and 7.2% for loans in foreign currency.
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. "
A new monetary policy prepared by the Central Bank of Honduras affects the competitiveness of the financial sector and credit availability.
Honduran banks reduced by $1,500 million the amount available for loans to the productive sector and may raise interest rates in light of provisions by the Central Bank of Honduras.
A statement from the Honduran Association of Banking Institutions (AHIBA) reads:
The recent increase in the value of the Costa Rican colon versus the dollar is worrisome, not only because there are no clear reasons to explain it, but also because it would be hard to contain it without causing greater problems.
In the past weeks, and without apparent reason, the price of the U.S. dollar in Costa Rica dropped considerably.
Last week we surveyed some financial operators as to why these movements where occurring, the general answer being: “we don’t know”.
Fitch Ratings warned that although Central American sovereigns have resisted the global crisis pretty well so far, they now require fiscal consolidation in order to maintain their credit ratings.
Summary
Fitch‐rated Central American sovereigns have thus far withstood the destabilizing effects of the global economic and financial crisis, despite monetary and exchange rate policy challenges.
Although recent public opinion has focused on what went wrong with securitization, it is important to recognize the many benefits associated with sound securitization.
Global Financial Stability Report (GFSR), October 2009 - Chapter 2
Key points:
Sound securitization provides important benefits—to allocate credit more efficiently, transfer credit risk away from banking sector to more diversified investors, and more finely tailor risks and returns to potential end investors.
The central bank of Honduras announced that new rules are to be published for dollar auctions and the way in which the lempira's sliding devaluation is managed.
Ana Cristina Mejía de Pereira, former president of the National Banking Commission said the new rules would have to be presented in transparent fashion to the financial institutions and the public at large.