American Expatriate Costa Rica

Central Bank wants to prevent inflation from exceeding 4% in 2019

The measure announced on Thursday by the Central Bank to increase the monetary policy rate (TPM) seeks to prevent inflation from exceeding 4% in 2019. This was explained by Rodrigo Cubero, president of the Central Bank, at a press conference.

The MPR is a reference rate used by the Bank to find the cost of liquidity (money) in the markets.

According to the head of the Monetary Authority, inflation expectations reached 3.9% in October, influenced by recent increases in the exchange rate, which suggests greater pressures for next year. This means that next year’s inflation will exceed the target range established in the Macroeconomic Program 2018-2019, which ranges from 2% to 4%.

Cubero explained that the measures of the Central Bank can take up to 12 months to take effect and hence the need to make the increase now, to try and raise the interest rates of the financial market.

With the upward movement in interest rates in the United States, an expectation in the exchange rate and the increase in the country’s risk, savings instruments lose attractiveness. What we want is to regain attractiveness,”

said Cubero, who acknowledged that, while an increase in interest hits the pocket of Costa Ricans, the consequences would be worse if the adjustment is made through prices.

crhoy.com