Although the downward adjustments made months ago in the bank reserve and monetary policy rate do not yet appear to have had an effect on the loan portfolio in Costa Rica, banks expect credit to be reactivated soon.
In order to boost credit issuance, the Central Bank reduced from 15% to 12% the minimum legal reserve rate that institutions in the banking system must maintain as a reserve.
The new rate, which will come into effect on June 16 of this year, has not been reduced since 2002, and the authorities expect that this decrease will generate a greater availability of loanable resources in colones, as well as a reduction, for financial institutions, of the cost of raising funds in national currency.
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%.
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."