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Costa Rica Monetary Policy June 2024

Costa Rica: Central Bank holds policy rate in June

At its meeting on 20 June, the Central Bank of Costa Rica (BCCR) unanimously decided to maintain the policy rate at 4.75%.

The Bank decided to pause its monetary easing cycle, highlighting that risks to the inflation outlook are skewed to the upside and include supply disruptions stemming from geopolitical tensions and weather conditions, as well as portfolio re-composition effects caused by a negative interest rate differential with the U.S. Fed. Another factor influencing the Central Bank’s decision was the slowdown in the deflationary trend, as consumer prices dropped 0.3% year on year in May (April: -0.5%). The Bank sees prices rising again in H2 and expects inflation to return to the 2.0–4.0% target in Q1 2025.

The Central Bank reiterated its commitment to moving towards monetary policy neutrality in a gradual and prudent manner, indicating that any future changes to the TPM will be carefully considered in response to macroeconomic conditions and risk assessments. The Consensus is for the Bank to cut rates by around 50 basis points by year-end. The next monetary policy meeting is scheduled for 18 July.

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