The Board of Directors of the Central Bank of Costa Rica (BCCR) cut the Monetary Policy Rate by 25 basis points, bringing it to 3% per annum. The decision responds to persistently low inflation and a slowdown in economic activity.
The Central Bank of Costa Rica (BCCR) has once again reduced its benchmark interest rate. The Monetary Policy Rate (TPM) decreases from 3.25% to 3.00% per annum, a 25 basis point cut approved by the entity's Board of Directors.
The measure is based on two main factors: inflation remains below the 3% target and the economy shows signs of slowing down. According to the BCCR, year-on-year inflation closed June 2026 in negative territory, and core inflation indicators have hovered around 0% since February.
Moreover, short- and medium-term inflation expectations are also below the official target. This indicates that price pressures are very limited, giving the central bank room to ease monetary policy.
On the economic front, activity is losing momentum. The slowdown is observed in both special regime companies and those under the definitive regime, suggesting a widespread moderation in production.
The labour market is also not escaping this trend. The number of employed individuals has remained practically stable in recent months, while real incomes have slightly declined. This reflects a lower dynamism in domestic demand.
The BCCR has also taken into account the international context. Geopolitical conflicts, the evolution of commodity prices, and extreme climate phenomena are upward risks for inflation, although it is still unknown when or with what intensity they may materialise.
Despite these risks, the Board of Directors considered that the margin was sufficient to reduce the TPM without jeopardising macroeconomic stability. Monetary and financial indicators, such as credit and liquidity, are growing at a pace compatible with inflation control.
The TPM is the main tool of the BCCR to influence interest rates in the financial system. A cut like this tends to lower the cost of credit, stimulating consumption and investment, although the actual effect depends on how quickly banks pass on the adjustment to their customers.
For Costa Rican households and businesses, this reduction could translate into cheaper loans in the medium term. However, the central bank warns that the transmission is not automatic and will continue to monitor the evolution of the economy.
The BCCR reaffirmed its commitment to the 3% inflation target and stated that it will adjust the rate in the necessary direction if conditions change. The next Board meeting will be crucial to see if this cycle of cuts continues.
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