Rodrigo Cubero, president of the Central Bank, confirmed the strong pressure exerted by the exchange rate in recent weeks that already affects the inflation goals of the Central Bank. The head of the entity confessed on Thursday that the expectations for a year term have been accelerating as a result of a more expensive dollar.
The official was invited on Thursday to the commission of Control of Income and Public Expenditure.
Although his intervention was cut in about an hour -at the beginning and at the end of the session- Cubero was patient in explaining that the Central Bank maintains an inflation goal of between two and four percent, but the Expectations for a one-year term, initially forecast at 3.5%, have already gone up to 3.9% due to the growth in the exchange rate.
This happened in the last two months when started to accelerate because exchange expectations also accelerate, the movement in the exchange rate makes people expect the dollar to be higher in a year and that generates inflationary expectations that can have an impact on real prices,”
The immediate measure was to raise the monetary policy rate from five to 5.25 last week. Interest rates on time deposits in colones were also increased, especially those with a longer term, to encourage people to change their savings from dollars to colones.
The exchange rate reached a record of ¢638, after being below ¢600 several weeks ago.
Cubero reiterated that there is great uncertainty in the market and that is the cause behind the rise in the exchange rate. This uncertainty is due to the fiscal situation of the country.
So far in the current administration, the issuing body has come to the market to intervene with $ 1.700 billion to try to keep the price of the US currency stable.
It will depend on market movements, we are committed to maintain the adjustment in the exchange rate, not to determine it, but we want to avoid abrupt movements… in a floating regime it can move up or down and if it is to the downside, we may intervene buying dollars to mitigate the effect,”