Modest Inflation, Dovish US Fed Will Enable Low Interest Rates In Costa Rica In 2021

  • The Banco Central de Costa Rica (BCCR) will maintain a dovish monetary policy stance in 2021, aided by low domestic inflation and sustained global central bank dovishness.
  • In addition, the government’s limited fiscal capacity will leave monetary policy as the primary driver for Costa Rica’s economic recovery in the coming quarters.
  • Fitch Solutions forecasts the BCCR will hold its benchmark interest rate at 0.75% through end-2021, and expect inflation will average 1.8% y-o-y in 2021.

(Source: Fitch Solutions)