Costa Rica Post

Pura Vida, Every Day
Tuesday, Apr 22, 2025

Costa Rica's Central Bank Warns of Rising Inflation in 2025 Amid Global Uncertainty

Central Bank President Róger Madrigal highlights the need for cautious monetary policy as inflation forecasts surge, while international and domestic factors signal turmoil.
As the global landscape becomes increasingly unpredictable, the Banco Central de Costa Rica (BCCR) plans for possible inflation hikes in 2025.

The bank's president, Róger Madrigal, shared these projections as the Board of Directors decided to maintain the monetary policy rate (TPM) at 4% in its final meeting of 2024.

In a press briefing on December 19th, Madrigal underscored the unpredictable nature of inflation trends, which placed a potential interest rate adjustment under scrutiny.

'The world at large sees more uncertainty,' Madrigal remarked, emphasizing the critical need for prudence in the monetary policies of global central banks.

The latest inflation data presents a complex picture: while November saw a negative year-on-year inflation rate, the monthly change was a positive 0.47%.

Madrigal considered this a significant, albeit tentative, adjustment.

December's preliminary figures also suggest a positive fluctuation in price indices.

However, Madrigal cautioned against premature conclusions: 'This is today's situation.

We'll need the January figures to see if these fledgling trends solidify.

In such uncertain times, caution is paramount,' he stated.

Projections indicate a gradual inflationary increase, anticipated to fall within the bank's target range of 2% to 4% by Q3 2025.

External factors, including potential inflation in the United States—Costa Rica's primary trading partner—could further push prices upward.

Economic analyst Rolando Saborío from Universidad Estatal a Distancia (UNED) warned of the inflationary pressures stemming from anticipated U.S. trade and immigration policy shifts under the new administration.

November's inflation, scored at a -0.09% change in the Consumer Price Index (CPI), marks the 19th consecutive month below the BCCR's tolerance range.

Criticism has arisen, notably from Marco Otoya of the University of Costa Rica's Cinpe, who argues that the BCCR's reactive stance during inflation spikes contrasts with its current inertia as inflation ebbs.

Otoya suggested that the global factors influencing local prices are not showing threatening signs of substantial hikes in vital imports such as oil.

The BCCR's assessment of inflation involves evaluating risks that could influence inflation either upwards or downwards.

On the downside, weaker-than-expected economic growth among key trading partners and the potential continuation of restrictive monetary policies pose threats.

Conversely, geopolitical conflicts, restrictive trade measures, and adverse climatic conditions present risks of consumer price hikes.

The reference rate for credit and investment operations in local currency remains at 4% since October 18, continuing at least until January 23.

This 2024 monetary policy conclusion positions the TPM near a 'neutral' zone, aligned with a 3% inflation target.

Madrigal assured that inflation stability is the primary objective, with the monetary policy rate continually evaluated against evolving economic contexts.

Meanwhile, Alonso Alfaro, BCCR's Chief Economist, noted the policy stance could shift swiftly, given the volatility of economic conditions.

'Situations change rapidly, sometimes violently, and the Central Bank commits to responding appropriately to new information,' Alfaro declared, underscoring the TPM's role as a pivotal economic lever influencing savings, loans, and consumption behavior.
Newsletter

Related Articles

0:00
0:00
Close
Global Leaders Pay Tribute to Pope Francis Following His Death
El Salvador Proposes Prisoner Exchange with Venezuela Amid Deportation Controversy
US Government Defends Deportation of Salvadoran National Kilmar Abrego Garcia
A casino in Mexico burns at the hands of cartels
Pope Francis Makes Brief Appearance at Easter Sunday Mass
"Some complain that we put thousands in prison. In reality, we set millions free."
US Judge Blocks Trump Administration's Rapid Deportation Policy
U.S. State Department Raises El Salvador’s Safety Ranking, Making It Safer Than France and Other European Nations
U.S. and Panama Finalize Defense Agreements Amid Canal Access and Chinese Influence Concerns
Alisha Lehmann's Modeling Campaign and Public Controversy Stir Debate Ahead of UEFA Women's Euro
Argentina's "Magician" or a Public Relations Illusion? "Individuals Are Sifting Through Garbage and Resting on the Sidewalks."
Ecuador Gears Up for US Military Deployment in Response to Action Against Violent Drug Cartels
The Trump administration has rescinded legal status for more than 530,000 migrants hailing from four nations.
Trump Administration's Deportation of Alleged Gang Members Sparks Legal Dispute
Deadly Tornadoes and Dust Storms Lead to 33 Deaths in Central and Southern United States
Mark Carney Chosen as Leader of Canada's Liberal Party, Poised to Become Prime Minister
Trump Administration Plans New Travel Ban Including Afghanistan and Pakistan
US Announces $10 Million Bounty for Capture of Ex-Olympic Snowboarder Now Drug Kingpin
El Salvador Pursues Extradition of Former Colonel Tied to 1982 Killings of Dutch Journalists.
U.S. Creates Strategic Cryptocurrency Reserve, Sparking Market Surge
Research Explores Possible Connection Between COVID-19 Vaccines and Post-Vaccination Syndrome
Latin America News Synopsis: Gatherings, Legal Disputes, and Economic Developments
Mexico Offers Constitutional Amendments to Protect Sovereignty in Response to U.S. Terrorist Labels for Cartels
Tequila Sector Faces Oversupply Challenge as Agave Prices Drop Sharply
Costa Rica to Welcome Repatriated Migrants from the United States
New York Fashion Week Showcases Iconic Comebacks and Rising Stars
OpenAI Revises Its Approach in Response to Growing AI Competition
Trump Wins Again as Canada Agrees to Strengthen Border Security
Wall Street Journal Criticizes Trump's Trade War with Canada and Mexico
Trump Freezes Tariffs on Mexico After Agreement on Border Security
Apple Abandons AR Glasses Project Amid Struggles with Technology and Market Demand
U.S. Clinical Study Investigates Medication to Prolong Dogs' Lifespan
Trump: Canada Should Become the 51st U.S. State
Panama Rules Out Negotiations With US Over Control of Canal
The 'Chinese Pearl Harbor' on U.S. Tech: DeepSeek's Launch Triggers Market Collapse
Key Takeaways from the 2025 World Economic Forum in Davos
BlackRock CEO Larry Fink Suggests Bitcoin Could Reach $700,000 with Increased Institutional Investment
Five Billionaires on Track to Break One Trillion Dollar Wealth Barrier
Celebrity Responses to California Wildfires: Charity, Criticism, and Controversy
Saprissa Withdraws from Costa Rica's Women's Soccer First Division, Sparking Debate and Concern
Miguel Herrera: Farewell Video from Fox Sports as He Takes on Costa Rica National Team
Controversial Reappointment: Costa Rican President Rodrigo Chaves Names Marta Esquivel as Planning Minister
A Long Battle Ends in Tragedy for Shooting Victim in Costa Rica
Triple Homicide in Los Chiles: Couple and Five-Year-Old Girl Fatally Shot
Horacio Elizondo Resigns Irrevocably from Costa Rica's Football Federation Amidst Controversy
Costa Rican Digital Vehicle Licensing Bid Faces Another Setback
Convict Recaptured After Brief Escape from La Reforma Prison Complex
José Giacone: Confident in Saprissa's Enhanced Competitiveness This Season
Costa Rican President Rodrigo Chaves Considers Shift to Congressional Leadership
Pope Francis Praises Costa Rican Coffee as the World's Best
×