Central Bank of Costa Rica reduces interest rates by 50 basis points

2023-06-17 12:00:48

Central Bank of Costa Rica It has reduced interest rates by 50 basis points, going from the level of 7.5% to 7%, despite the sharp drop in inflation in recent months.

Although the reduction observed in inflation has been faster than expected in the monetary policy meetings held in January, March and April, the central bank estimates that the balance of risks for the inflation projection in the medium term is inclined to rise .

Among these upward risks, those associated with supply shocks generated by weather events, external ones linked to increases in the prices of raw materials, as well as possible second-round effects stand out. All in all, these risks would be partially offset in the event that trading partners grow less than expected.

Despite this uncertainty, the entity’s inflation projections indicate that general inflation in the remainder of 2023 will be below the lower limit of the tolerance range around the target, and it is not ruled out that in the short term it will observe negative interannual variations.

Consequently, given the lag with which monetary policy acts, the Board of Directors estimates that there is “room” to gradually and prudently encourage the monetary policy stance to be less restrictive.