Costa Rica: Central Bank cuts the policy rate by 100 basis points in April
At its 20 April meeting, the Central Bank of Costa Rica (BCCR) cut the policy rate by 100 basis points to 7.50%. At its previous meeting in March, the bank had reduced rates by 50 basis points—its first cut since June 2020.
The decision came amid a significant slowdown in both inflation and 12-month inflation expectations since September 2022 and August 2022, respectively. Financial market expectations also point to a further deceleration in inflation. Cost-push inflation continues to ease amid a persistent slowdown in producer prices. The BCCR now expects headline inflation to return to the target range sooner than its January and March projections of Q4 2023.
In terms of guidance, the BCCR remained dovish, stating that, despite some upside risks to inflation over the medium term, “there is room for the monetary policy stance to be less restrictive”. Our panelists also expect the Bank to cut rates further this year.
The next meeting is scheduled for 14 June.