Last week, 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 to 5.25% per annum.
In order to decide the level of the TPM, the Central Bank evaluates the recent behavior and trajectory of inflation forecasts and its macroeconomic determinants. The decision also considers the analysis of the economic situation, as well as the risks it identifies, whether internal or external, whose materialization would deviate inflation from its central projection.
The decrease in external prices has also been a determining factor in the evolution of the Manufacturing Producer Price Index, which fell 4.7% in February. This anticipates lower cost-push pressure on final consumer inflation indicators.
Finally, deflation has been more persistent than expected; however, the Central Bank estimates that the return to positive values for inflation will begin in the second half of 2024, and that the entry into the tolerance range will occur at the beginning of 2025.