Only six Latin American countries have lower interest rates than those offered by Costa Rica. And it is that with a weighted average of the lending rates in national currency of 9.7%, our country stands out in the ECLAC study. Even, with respect to the previous quarter, it fell by 0.2 points and with respect to the previous year the decrease is 1.6 points.
With cut to May or the most recent available in some cases, it is reflected that El Salvador has the lowest rates (6.4%), followed by Panama (6.9%), Colombia (8.5%) Uruguay ( 8.6%), Ecuador (8.8%) and Chile (8.8%). The opposite is the case in Venezuela, for example, since the average of its six main commercial banks gives a rate of 47%.
Disparity in the region
This demonstrates the disparity in the region, while in the cases of Colombia, Costa Rica, Guatemala, Honduras, Jamaica, Paraguay, Peru, the Dominican Republic and Uruguay, the monetary policy reference rates have not changed. Since November 2020, in Brazil and Mexico they increased in the first half of 2021, and in Chile they increased in July of this year.
The authorities of the central banks of Brazil, Chile and Mexico have taken into account the pressures that the recovery disparity shown by the supply of goods and services and consumption has placed on prices: while the supply continues to be limited by problems in the supply chains and the rise in the price of raw materials, such as fuel, the recovery in activity and fiscal impulses have resulted in an increase in consumption since the third quarter of 2020, which could stimulate higher inflation.
However, in Costa Rica the intention is to keep the interest rate low, since the Central Bank trusts that the rise in inflation will not exceed 3% in two years. The evidence that consumer prices are not growing at levels as noticeable as that of producers; In other words, they do not transfer those higher prices to them to the consumer, which can be explained because there must still be a lower demand for products in Costa Rica.
For example, in our country, the Consumer Price Index grew 1.9% as of June, while in countries such as Brazil or Mexico, which increased their rates, the growth is 8.3% and 5.9%, respectively. This and other disinflationary pressures such as the high unemployment rate and that companies are still not producing at their maximum capacity, mean that there is still no alarm.
Therefore, the Monetary Policy Rate has remained in this way at 0.75%, the same as in Paraguay, and only exceeding 0.50% in Chile (but already, as mentioned, in July it was raised to 1.5 %) and 0.25% from Peru.
Thus seeking to encourage credit with low interest rates. This is because when inflation is low, consumers benefit, since their money has more value; It is not necessarily that the prices of the products will begin to fall, but they will increase at a slower rate. In other words, low inflation eventually has a positive impact on the purchasing power of consumers and businesses.