Colon tanks, Costa Rica raises interest rates to slow inflation
For the first time in history, the Costa Rican Colon surpassed 600 colones per dollar. On Wednesday, some banks were reporting an exchange rate of ₡616 for $1.
This week’s dip was caused by uncertainty surrounding the proposed tax reform bill designed to contain Costa Rica’s growing public deficit.
The proposal passed the first debate in the Legislative Assembly and is now being debated by the Constitutional Chamber of the Supreme Court (Sala IV). The Minister of the Presidency, Rodolfo Piza, said the currency’s devaluation was a “wakeup call” that showed the need to pass tax reform.
“Several months ago, the Finance Minister (Rocío Aguilar) said that if the [tax reform bill] wasn’t passed in time, there would be strong effects on the economy,” Piza said.
The Costa Rican Colon’s value dropped 9 percent in 2018 according to the Central Bank of Costa Rica (BCCR).
On Thursday, the BCCR announced steps it was taking to slow inflation. Rodrigo Cubero, president of the BCCR, said that Costa Rica would raise interest rates. The policy rate rose 25 base points to 5.25 percent per year while the gross interest rate rose 19 base points to 3.23 percent per year.
“The Central Bank’s inflation models suggest that inflation in 2019 could surpass the upper limits of our target range,” Cubero said. The BCCR established an inflation goal of 3 percent, with a margin of plus or minus 1 percentage point.
You may be interested
Costa Rica to begin administering HPV vaccineAlejandro Zúñiga - April 25, 2019
The Social Security System (CCSS) announced Wednesday that Costa Rica will begin administering the human papilloma virus (HPV) vaccine as…
Costa Rica approves law against child abuse prepared by alleged victims of priestAFP and The Tico Times - April 24, 2019
Costa Rica’s congress approved on Tuesday a bill that extends the statute of limitations for the crime of sexual abuse…
International drug rehab in Costa Rica with the Costa Rica Treatment CenterThe Tico Times - April 24, 2019
Costa Rica Treatment Center understands the process of addiction recovery from personal experience. Their evidence-based treatment programs are engineered to…