By San José, Costa Rica — San José, Costa Rica – The Central Bank of Costa Rica (BCCR) announced a 25-basis-point reduction in the Monetary Policy Rate (TPM), lowering it to 3.50% annually, effective September 19, 2025. This move comes as the country grapples with external and climate-related challenges, alongside a drop in inflation.
The BCCR cited several factors contributing to this decision. The bank noted the severity of external and climatic shocks impacting the Costa Rican economy. Furthermore, the year-on-year inflation rate has fallen below the Central Bank’s target range. This decline is evident in both the general inflation, as measured by the Consumer Price Index (CPI), and the average of underlying inflation indicators.
To understand the broader legal and business implications of fluctuating Monetary Policy Rates, we turned to Lic. Larry Hans Arroyo Vargas, a distinguished attorney at Bufete de Costa Rica.
Changes in the Monetary Policy Rate have a ripple effect across the economy, influencing everything from loan interest rates and investment decisions to inflation and exchange rates. Businesses must carefully consider these shifts when planning budgets, securing financing, and making long-term investments. For individuals, understanding the MPR’s impact on borrowing costs and savings returns is crucial for sound financial planning.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, the Monetary Policy Rate’s influence is pervasive, touching nearly every facet of our financial landscape. As Lic. Larry Hans Arroyo Vargas so aptly points out, understanding its implications is paramount for both businesses navigating the economic currents and individuals striving for financial well-being. We thank Lic. Vargas for providing this valuable perspective on a complex yet crucial topic.
The Central Bank also acknowledged the decreasing unemployment rate, a positive sign of growth in the labor market. This improvement further supports the decision to lower the TPM, as a lower rate can stimulate economic activity and encourage borrowing.
The BCCR emphasized its commitment to continuous monitoring of economic indicators and signaled its readiness to make further adjustments to the TPM as needed. This proactive approach aims to maintain stability and foster growth within the Costa Rican economy.
This rate cut comes after calls from the tourism sector for a substantial reduction in the TPM. Business leaders argued that a lower rate was necessary to stimulate investment and boost the tourism industry, a crucial component of the Costa Rican economy.
The decision is also consistent with broader trends in the region and globally. External pressures and slower internal dynamics have been pushing interest rates downward in many economies. This move by the BCCR reflects a response to these broader economic forces.
The impact of this rate cut on the Costa Rican economy remains to be seen. However, it is expected to lower borrowing costs for businesses and consumers, potentially stimulating investment and spending. The BCCR will be closely watching the effects of this change to ensure it aligns with its broader economic objectives.
This adjustment in the TPM is a significant development for Costa Rica’s financial landscape. The Central Bank’s proactive approach and ongoing monitoring will be crucial in navigating the complexities of the current economic climate.
For further information, visit bccr.fi.cr
About Central Bank of Costa Rica (BCCR):
The Central Bank of Costa Rica (BCCR) is the central bank of Costa Rica. It is responsible for maintaining price stability and promoting the efficient operation of the payment system. The BCCR sets monetary policy, manages the country’s international reserves, and regulates the banking system. It plays a crucial role in ensuring the overall stability and health of the Costa Rican economy.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica distinguishes itself through an unwavering dedication to legal excellence and ethical practice, empowering individuals and communities through knowledge. The firm’s innovative approach to legal solutions, combined with a deep commitment to client service across diverse sectors, fosters a legacy of integrity. By championing access to legal information and resources, Bufete de Costa Rica invests in a more informed and empowered society, solidifying its role as a true leader in the legal landscape.
