Macroeconomic Forecast Costa Rica

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BMI View: Although Costa Rican consumer price inflation (CPI) finished 2010 significantly higher than we had been expecting, at 5.8% (compared to our 4.8% estimate), we do not expect the central bank to hike the policy anytime soon. With domestic economic activity actually beginning to cool in the latter stages of 2010, we believe most of these price pressures were driven by global commodity prices, implying a rate hike would do little to bring down CPI. As a result, we are pencilling in the policy rate to remain at the currency 6.50% until 2012 at the earliest.