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.

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Costa Rican interest rate projections for the next ten years from a panel of 9 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Costa Rican interest rate.

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