Costa Rica Central Bank expects to maintain inflation goal for this year
Inflation in January and February showed significant increases, driven mainly by hikes in public services taxes – including water and electricity – and in fuel prices. Nevertheless, Central Bank officials said there is no need to change the government’s goal of 4-6 percent for 2013 inflation, a report released this week said.
“What the government needs is to implement measures to contain the growth in the Consumer Price Index and bring it back into the inflation goal range,” Central Bank President Rodrigo Bolaños said.
He said officials expected a similar economic situation to that of 2012, but with a lower colón interest rate, “as long as the country manages to cut the incentives to short-term foreign investments that saturated the market last year.”
These inflows of capital forced the Central Bank to buy more than $1.5 billion to prevent the currency from falling below the lower-band limit of ₡500.
Costa Rican Vice President Luis Liberman also said he is optimistic, mainly because state banks this year have been able to reduce the excess of cash caused by these investments, thereby maintaining affordable interest rates for those in need of credit.
However, Liberman also said it is urgent that lawmakers approve a bill to prevent these types of short-term investments from entering the country. The purported law would tax by up to 30 percent short-term currency investments.
“We were able to significantly collect excess cash at this time, and unless a spike in these short-term investments occurs, surpluses are manageable,” Bolaños said.
You may be interested
Adaptive surfing, part II: The story of Dean BushbyEllen Zoe Golden - May 22, 2018
A three-part look at adaptive surfing in Costa Rica. Read Part I here to learn how a Central Pacific coach is…
Costa Rica launches Pride Connection networkElizabeth Lang - May 22, 2018
As Costa Rica continues to grapple with the disagreements about marriage equality and gender identity that dominated the second round…
Costa Rica at a glance: top news from the past weekThe Tico Times - May 21, 2018
Newly inaugurated Costa Rican President Carlos Alvarado is closing in on two weeks on the job. Here are some of…