The reduction in interest rates paid on electronic deposit ranges from 0.2 percentage points to 0.5 percentage points for periods ranging from two months to five years.
Nacion.com reports that "The Central Bank lowered, from last Saturday, the interest rates offered on their electronic deposits, which are acquired through the digital platform .... Central Directo, 2 February was the last time the company reduced its interest rates. "
As of Thursday 7 February, the passive base rate is located at 8,05%, continuing the downward trend which begun on December 27.
Elfinancierocr.com reports that "Economists project the continuation of the decline and that it will approach levels of between 7% and 7.5%."
"The Executive and the Central Bank of Costa Rica have announced intentions and measures in the next few weeks to lower local interest rates which, because of their level, are attracting capital from foreign investors who taking advantage of the differential with respect to the returns they could get in other places. "
There has been a decrease for the fifth consecutive week of the base borrowing rate by the Central Bank of Costa Rica, settling at 8.6% today.
This indicator is a weighted average of the interest rates in colones on gross collections, by financial intermediaries negotiated by domestic residents and the interest rates of deposit instruments of the Central Bank and Ministry of Finance negotiated both in the primary and secondary market, each corresponding to periods of between 150 and 210 days.
Continuing the downward trend of recent weeks, the passive base rate (PBR) as of the January 17, is now at 8.90%.
Since the Central Bank of Costa Rica changed its methodology for calculating the PBR, this is the fourth consecutive drop of the indicator.
"The behavior of the TBP coincided with the trend seen in recent weeks in the stock market, specifically with the pace of yields from the auction of Treasury bonds (primary market).
Managers of large Costa Rican public institutions are coordinating actions with government officials and state banks.
According to an article in Elfinancierocr.com, the meeting held on Monday 14 January is part of a consultation strategy that President Chinchilla is conducting in order to find the best way to control speculative capital inflows.
Alfredo Volio, chairman of the board of Banco Nacional, said: "The idea is to seek a reduction in interest rates, integrating the entire public sector for us to coordinate efforts."
For the third consecutive week the Central Bank of Costa Rica’s basic borrowing rate has fallen, now standing at 9.05%.
This indicator is a weighted average of the interest rates of gross deposits in colones, negotiated by resident financial intermediaries, and the interest rates of deposit instruments of the Central Bank and Ministry of Finance, negotiated both in the primary and secondary markets, each corresponding to periods of between 150 and 210 days.
Since late December last year, the Central Bank of Costa Rica has applied a new methodology for calculating the passive base rate.
From the website of the Central Bank of Costa Rica (BCCR):
Passive Base Rate
A. Definition
The base rate is a weighted average of the interest rates in colones on gross collections by financial intermediaries negotiated by domestic residents and the interest rates for deposit instruments of the Central Bank and Ministry of Finance negotiated both in the primary and secondary market, each corresponding to periods of between 150 and 210 days.
Costa Rican financial institutions are questioning the exclusion of the Treasury and the Central Bank in the new base rate calculation.
The Costa Rican Banking Association (ABC in Spanish) has questioned the exclusion of the Ministry of the Treasury and the Central Bank, as it asserts that with the change a large part of the country's financial system is being excluded.
The reduction is significant and moves the indicator away from the 11% reached just two months ago, but is still two percentage points above its November 2011 level.
From the Blog Pulso Bursátil by Aldesa:
The base rate fell again today, closing at 9.50%, according to the Central Bank of Costa Rica, which calculates the indicator.
The base rate is an average of deposit rates used by financial institutions with maturities of 150-210 days.
The interest rate on Electronic Fixed Term Deposits ranging from 30 days to five years has decreased by between 0.25 to 0.32 percentage points.
"For a period of 30 to 59 days (from one month and up to two months) the gross rate (not excluding the 8% tax) increased from 3.92% to 3.6% and for those within 60 days to 89 days (two months to less than three months), it increased from 5.5% to 5.2%.
The Central Bank of Costa Rica said that the new formula for calculating the base rate means that it will be a more stable indicator.
Rodrigo Bolaños, president of the institution, explained that this will help over 400,000 borrowers who have credit obligations linked to this indicator.
The new methodology was presented yesterday and today will be published in the official gazette, meaning that it will become effective within 10 days, if there are no comments.
Market perception is that interest rates may come down the next year, and therefore there will be a greater appetite now for buying the bonds that currently have high interest rates.
A statement from Pulso Bursátil, the blog by Aldesa:
Investors want to exploit the high rates in colones
The Treasury bond auction today was a success and the amount offered for their bonds in colones was the highest in several auctions, demonstrating that the market perception is that interest rates could come down next year and therefore there will be a greater appetite now for buying the bonds that currently have high interest rates.
After a warning by President Chinchilla to state commercial banks, the financial entities involved have put their interest rates on a diet.
The passive base rate, an index calculated by the Central Bank of Costa Rica (BCCR), is a weighted average of the interest rates in colones on gross savings, negotiated by financial intermediaries resident in the country and the interest rates of collection instruments of the Central Bank and Ministry of Finance negotiated both in the primary and secondary market, each corresponding to periods of between 150 and 210 days.
For the second consecutive week, the passive base rate has been reduced, this time by 25 percentage points, to stand at 9.75%.
The indicator calculated by the Central Bank of Costa Rica has not been at this value since last June.
"A decrease in the average rates of public sector banks was what caused the indicator to decrease this time. According to the Central Bank calculations these entities increased from 9.81% to 9.59%.
The passive base rate (PBR) calculated by the Central Bank has fallen 25 percentage points to 10%.
For three months now the indicator has been at or above 10%.
The BPR, "which serves as a reference to calculate the repayment amounts of most loans in colones, reported a reduction of three-quarters of a percentage point from the end of October.
The decline was mainly due to the fall in yields that the state bank pays the public", reported Nacion.com.