Central Bank of Costa Rica leaves rates unchanged in October

Rates on hold after September’s cut: At its meeting on 23 October, the Central Bank of Costa Rica (BCCR) decided to maintain its policy interest rate at 3.50%, pausing to allow prior cuts to filter through the economy. The decision came on the heels of September’s 25 basis point rate cut.

Prolonged deflation and a strong economy rule out both a cut and a hike: The BCCR ruled out a rate hike due to below-target readings for both headline and core price pressures: Consumer prices fell for the fifth consecutive month in September and at the fastest pace in a year and a half. Furthermore, the BCCR is now confident that consumer prices will continue declining in the remainder of 2025 and in the first months of 2026. Still, the Bank deemed a rate cut unnecessary, as the economy showed signs of acceleration through August and the labor market continued to improve.

Rates likely to stay on hold until end-2026: Most of our panelists expect the policy interest rate to remain at its current level until the end of 2026, while a minority sees 50–75 basis points of additional monetary policy easing. The BCCR will reconvene on 18 December.

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