The persistent appreciation of the Colon in previous months prompted the Central Bank to launch an aggressive program of foreign currency purchases in order to prevent the exchange rate from falling below the lower trading band. Against this backdrop, the IMF recently recommended the Central Bank to move away from a system of crawling bands to a more flexible exchange rate regime. The Bank agreed with the IMF, but added that the current circumstances are not favourable to abandon the current system. On 2 June, the Central Bank redefined the Monetary Policy Rate (TPM) as the reference to conduct very short-term interest rates (one day), paving the way for an inflation targeting regime. In an official communique released on 3 June, the Central Bank declared its intention to move towards an inflation targeting policy in order to achieve a low and stable inflation in the medium term. In addition, the Central Bank lowered the monetary policy rate from 6.50% to 5.00%, with the inclusion of a 100 bps corridor for one day liquidity transactions.
Costa Rica Monetary Policy
Central Bank paves the way for inflation targeting
June 3, 2011
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Costa Rica Economic News
October 12, 2016
In August, economic activity slowed down slightly to a 4.5% increase from the same month last year, according to the monthly index of economic activity (IMAE, Indice Mensual de Actividad Economica).
October 10, 2016
Consumer prices fell 0.47% in September from the previous month, which contrasted August’s 0.03% increase and marked the lowest reading since March 2016.
October 3, 2016
In the second quarter of 2016, GDP expanded 4.1% over the same period last year.
September 12, 2016
In July, economic activity slowed down slightly to a 5.1% increase over the same month last year, according to the monthly index of economic activity (IMAE, Indice Mensual de Actividad Economica).
September 7, 2016
Consumer prices increased 0.03% over the previous month in August, which was a significant slowdown compared to July’s 0.93% increase.