Money in Costa Rica
Costa Rica - Money
Central Bank cuts rates and shakes up its monetary policy in January
At its 29 January monetary policy meeting, the Central Bank of Costa Rica (BCCR) reduced the monetary policy rate (MPR) to 2.25% from 2.75%, which marks a near three-year low and the eighth rate cut since last March. The Central Bank also announced measures to improve monetary policy transmission, given that, despite recent MPR cuts, commercial lending fell last September for the first time in nearly nine years, and continued falling through December.
Weak inflation led the decision to cut rates. Inflation inched up to 1.6% in January from 1.5% in December, but remained below the Central Bank’s target range of 2.0%–4.0%, despite economic activity growth accelerating for the seventh consecutive month in December. The Central Bank said both headline and core inflation should average within its target range this year and next year, but will remain below the 3.0% midpoint, while economic growth should accelerate to 2.5% this year and 3.0% in 2021.
The BCCR announced measures to improve monetary policy transmission, including two new interest rates: One that is 1.5 percentage points below the MPR, which will serve for commercial bank deposits at the Central Bank, and one that is 0.5 percentage points above the MPR, which will serve for commercial bank borrowing from the Central Bank. The BCCR also announced a review of its inflation target and committed to releasing more frequent in-house assessments of the economy.
Looking ahead, the Central Bank will monitor whether inflation returns to and then stays within the target range. If this does not appear likely to transpire, the BCCR could well cut rates further.
FocusEconomics panelists are currently revising their forecasts following this MPR cut. New Consensus Forecasts will be available from 18 February.
Costa Rica - Money Data
|Money (annual variation in %)||11.7||6.1||2.1||-1.0||-0.4|
5 years of economic forecasts for more than 30 economic indicators.
Costa Rica Money Chart
Source: Costa Rica Central Bank and FocusEconomics calculations.
Costa Rica Facts
|Exchange Rate||571.0||-0.57 %||Jan 01|
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March 31, 2020
In the fourth quarter of 2019, the economy grew 3.3% compared to the same quarter a year earlier, up from the revised 2.5% growth reading in the third quarter (previously reported: +2.4% year-on-year) and the fastest reading since Q2 2018. Government consumption surged 10.2% in the fourth quarter compared to the same quarter a year earlier, up from 6.0% growth in Q3 and largely due to a low base effect following public sector strikes in Q4 2018.
March 13, 2020
Annual economic growth in cyclically-adjusted terms held steady at 2.5% in January, unchanged from December’s downwardly revised reading (previously reported: +2.8% year-on-year). January’s result was in part due to a slight acceleration in activity growth in the agriculture sector, which was offset by a heavier decline in the construction sector. In month-on-month terms adjusted for working days, economic activity rose 0.2% in January, as it did in December.
March 6, 2020
Consumer prices increased 0.29% in February in month-on-month terms, up from the 0.11% increase in January.
February 17, 2020
At its 29 January monetary policy meeting, the Central Bank of Costa Rica (BCCR) reduced the monetary policy rate (MPR) to 2.25% from 2.75%, which marks a near three-year low and the eighth rate cut since last March.
February 11, 2020
Annual economic growth in cyclically-adjusted terms accelerated to 2.8% in December from November’s downwardly revised 2.7% (previously reported: +2.9% year-on-year), representing the highest reading in nearly one-and-a-half years.