Costa Rica: Central Bank cuts rates in October
BCCR cuts again: At its meeting on 17 October, the Central Bank of Costa Rica (BCCR) decided to reduce the policy rate by 25 basis points to 4.00%. The move followed September’s 50 basis points cut.
Inflation risks skewed to the downside: The Bank reiterated that it still expects inflation to rise and return to the 2.0–4.0% target in Q3 2025. Nonetheless, it now sees risks to the inflation outlook skewed to the downside versus balanced in September, which prodded it to continue cutting rates. These risks include a decline in inflation expectations should inflation remain below target for longer, weaker-than-expected growth in key trading partners, and slower-than-anticipated monetary policy transmission in the country.
Additional cuts in 2025: The BCCR hinted at further cuts going forward, while stating that any changes to the policy rate will be “gradual and prudent”. The vast majority of our panelists expect the Bank to hold rates at its last meeting of the year on 19 December. Our Consensus is for 50 basis points of further cuts by end-2025.