At its session on 19 September 2024, the Board of Directors of the Central Bank of Costa Rica (BCCR) unanimously agreed to reduce the Monetary Policy Rate (TPM) by 50 basis points, placing it at 4.25% per year, effective from September 2024.
The BCCR’s decision seeks to maintain the stability of the national currency and is based on a scheme of inflation targets. This approach allows for a prospective monetary policy, which uses the MPC as the main tool to guide economic stability.
The Central Bank justifies the measure due to the decline in inflation both internationally and at the local level. In August, year-on-year inflation in Costa Rica stood at 0.3%, with an average underlying inflation of 0.6%, both below the target range of 3% and 1 percentage point.
The central bank also expects overall inflation to enter the tolerance range in the third quarter of 2025, while underlying inflation will do so in the first quarter of next year. The global economic slowdown and volatility in commodity prices, such as oil, have also been decisive in this decision.
The BCCR highlighted that since March 2023, the MPC has accumulated a reduction of 425 base points. Despite the reduction, the institution will maintain a prudent approach to ensuring an orderly convergence of inflation to its target and adjust the MPC according to the economic conditions so require.
This article has been translated after first appearing El Mundo