Costa Rica: Central Bank of Costa Rica cuts rates in December
Central Bank delivers its third cut of 2025: At its 18 December meeting, the Central Bank of Costa Rica (BCCR) lowered its policy interest rate by 25 basis points to 3.25%. The move followed a hold in October and marked the third reduction of 2025, bringing the policy rate 75 basis points below its level at the start of the year.
Subdued inflation and easing expectations justify the cut: The decision was primarily driven by low inflation, with both headline and core inflation remaining below the Central Bank’s tolerance range of 2.0–4.0% in November. Prices were subdued due to lower-than-expected international commodity prices and reduced domestic electricity costs. Moreover, inflation expectations remained muted in November.
Panel split on year-end outlook: The Bank’s future decisions will depend on incoming economic data and inflation expectations. Half of our panelists see rates on hold by year-end, while the rest are split between a cut and a hike. The BCCR will reconvene on 22 January.