The Central Bank of Costa Rica reported that as of May 9 the passive base rate will be set at 6.70%, down 0.05% from the previous week.
"With this reduction, the basic passive rate (TBP) reaches its lowest level since February 2008. At the beginning of this 2013, the indicator was at 9.20%, so it has lost 2.5% in just four months. A year ago, the TBP was by 10%," noted an article in Elfinancierocr.com.
The Central Bank of Costa Rica reported that from 2 and at least until May 8, the PBR will remain at 6.75%.
"This is one of the lowest recent levels and for the longest duration. The last time it was at 6.75% was in October 2010 and then it was only for a week," noted an article in Elfinancierocr.com.
Economists and stock brokers in Costa Rica are pointing towards a PBR of nearly 7% with inevitable declines and increases, but not very far from this rate.
The PBR has been set, from now until May 1st, at 6.75%, down 0.15% from the previous week, when it stood at 6.90%.
With this new low announced by the Central Bank of Costa Rica, the passive base rate (PBR) has lost 2.75% since Dec. 20 when the current period of decline began.
"This week, all of the groups of financial institutions considered for the calculation reduced the rates that they pay to their depositors on savings.
After three consecutive weeks at 6.95%, the PBR in Costa Rica dropped today to 6.90%.
According to the latest update by the Central Bank of Costa Rica (BCCR), this week the base lending rate (PBR) will drop to 6.90%, the lowest level of indicator in 2013, which started out in January at 9.20%.
"With this setting, the PBR is approaching the level of inflation measured by the Consumer Price Index (CPI) for March which was 6.21%," noted an article in Elfinancierocr.com.
For the third consecutive week, the base borrowing rate by the Central Bank will remain at the same figure.
Nacion.com reports that "the level of 6.95% is the lowest this year, as the rate started off in January at 9.20%. From there it has gradually dropped to its current level ".
"The reduction in the rate since January has been attributed to the Ministry of Finance and the banking system refraining from competing for the available resources in the domestic market, which made interest rates rise. Another reason is that the Central, in December, varied the way it calculates the PBR ".
The purchase of dollars by the central bank in order to prevent appreciation of the local currency is considered a form of subsidy for exporters.
From an interview in Nacion.com made by Patricia Leitón with the President of Banco Central Rodrigo Bolaños:
"I think it's very important that we continue with the gradual process of removing excess colones, we have already made a significant achievement, but of course these latest purchases of dollars have slightly increased the surplus".
The Banco Central de Costa Rica reported that as of Thursday, the passive base rate will be reduced by 0.05%, to stand at 7.05%.
This new low comes after a series of reductions which began in October 2012 when the passive base rate (TBP by its initials in Spanish) was 11%, the highest point in the previous year.
"With the new methodology for calculating this indicator, approved by the Central Bank last December, the rate is rounded to the nearest five base points and not to the nearest 25 base points as before," noted an article in Nation.com.
With a drop of 0.15 percentage points the passive base rate (TBP by its initials in Spanish) is located as of this March 14 at 7.10%.
This new adjustment to the indicator is in line with the downward trend seen since late December 2012.
"This is the twelfth consecutive TBP adjustment since 27 December. Just before that date, the indicator was 9.5%, therefore, in two and a half months it has lost 2.4 percentage points", noted an article in Elfinancierocr.com
The basic passive rate will be located from 7 March at 7.25%, the lowest in the past 18 months, after having reached 11% earlier in October.
Gabriel Alpizar, financial risk manager at the Bank of Costa Rica, said that "the main reason for the fall of the base rate lies in the fact that there is an abundant liquidity in colones which the central bank has made in recent months, adjusting this macroprice which is fundamental to our economy", noted an article in Crhoy.com.
Four months after being at 11%, the base rate, an indicator of great importance for Costa Ricans, is declining.
From the Blog Pulso Bursátil by Aldesa:
Four months after being at 11%, the base rate, an indicator of great importance for Costa Ricans, continues to fall and is currently at 7.35%.
This was announced today by the Central Bank, the entity that calculates the average of savings rates offered by financial institutions for periods of 150-210 days.
If they managed to get down the passive base rate down from 11% to 7.50% in just four months, why wasn't it done before?
Editorial
There are a lot of companies and individuals who every month have to make loan repayments that are tied to the passive base rate (TBP by its initials in Spanish), and of these, the indicator's rise to 11% led to the bankruptcy or foreclosure for quite a few.
The passive base rate continues its downward trend this week standing at 7.50%.
Banco Central de Costa Rica reported that the passive base rate (TBP by its initials in Spanish) fell by 0.3% and will be located from Thursday 21 February at 7.5%.
The adjustment was in response to a general decline in all groups of financial institutions (banks, cooperatives, mutuals).
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).