Costa Rica: Central Bank keeps the policy rate on hold at 9.00% at its December meeting
At its 14 December meeting, the Central Bank of Costa Rica (BCCR) kept the policy rate unchanged at 9.00%. Decembers decision marked the end of a sequence of eight consecutive rate hikes since the start of the tightening cycle in December 2021.
The move came after both inflation and 12-month inflation expectations declined for the third consecutive month in November. The BCCR now projects that inflation will return to the target range of 2.0%—4.0% in H1 2024, earlier than anticipated at the previous meeting. A less adverse inflation panorama gave the Bank the leeway to stand pat.
In its communique, the Bank assessed its current policy stance as restrictive and emphasized that rates will have to remain elevated to achieve its price stability objective. Additionally, the press release contained both dovish and hawkish elements: While the Bank commented on the slowdown in both domestic and global growth, it also highlighted that the evolution of producer prices remained an upside risk for consumer prices. That said, most of our panelists project rate cuts in 2023.
The next meeting is scheduled for 25 January.