Central Bank of Honduras Increases Monetary Policy Rate to Strengthen the Economy
The Central Bank of Honduras (BCH) has raised the Monetary Policy Rate (MPR) from 3.0% to 4.0%, effective August 2024. This rate represents the interest at which the BCH lends money to commercial banks, and its increase creates a ripple effect that raises borrowing costs for these banks, impacting credit access in the market.
According to the BCH, the increase in the MPR aims to mitigate internal inflationary pressures and preserve the country’s external position. In a context where inflation and economic stability are key concerns, this measure seeks to reduce credit demand and, consequently, curb rising prices.
Expected Positive Effects:
- Inflation Control: By making loans more expensive, consumption and investment are reduced, which helps to alleviate pressure on prices.
- Stabilization of International Reserves: A greater influx of foreign investment is expected to help maintain an adequate level of international reserves.
- Attraction of Foreign Currency: The BCH is confident that this decision will attract more foreign currency to the country, strengthening the national economy and helping to maintain financial equilibrium in the current global context.
This measure presents itself as a key strategy to address the economic challenges facing the country.
Godofredo Siercke
godofredo.siercke@garciabodan.com
Partner
García & Bodán
Honduras