Macroeconomic Forecast COSTA RICA

Inflation seems to have stabilized, coming in at 5.25% y-o-y in August, up only slightly from the 5.20% reading of a month earlier. The consumer price index continues to come within the 4.00% to 6.00% band targeted by the central bank, as the easing cycle initiated in the second half 2009 remains in place. Consistent with our view that the central bank will likely cut rates by an additional 50bp to 4.5% by year-end, we are sticking to our forecast of 5.5% y-o-y inflation by end-2011.

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