Central Bank leaves rates unchanged in July

At its meeting on 18 July, the Central Bank of Costa Rica (BCCR) unanimously decided to maintain the policy rate at 4.75%. The decision marked the second consecutive hold.

The Bank opted for a wait-and-see approach instead of cutting rates, as it deemed that risks to the long-term inflation outlook remain skewed to the upside. Risks include spikes in commodity prices due to rising geopolitical tensions and portfolio re-composition effects caused by a negative interest rate differential with the U.S. Fed. In addition, the BCCR said it wanted to wait for prior monetary policy adjustments to filter through the economy.

The BCCR reiterated its commitment to responsibly advance towards monetary policy neutrality as macroeconomic circumstances allow, indicating that any changes in the policy rate will be gradual and prudent, aimed at responding appropriately to macroeconomic conditions and risk assessments as required. Our Consensus is for the Bank to reduce rates by around 50 basis points by end-2025. The next meeting is set for 19 September.

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