The Central Bank of Honduras (BCH) Increases the Monetary Policy Rate (MPR) from 3.0% to 4.0%

Our lawyers in Honduras, experts in Corporate and Regulatory Law, share this article on the increase from 3% to 4% in the monetary policy rate by the Central Bank of Honduras to mitigate domestic inflationary pressures and preserve the country's external position. 

Source: Central Bank of Honduras. 

On July 16, 2024, the Open Market Operations Commission (COMA) of the Central Bank of Honduras (BCH) evaluated the country's economic situation in a challenging international and national context. The Honduran economy has faced various problems since 2022, and in response, the Honduran government implemented public policies such as fuel and electricity subsidies to mitigate the impact on prices and the welfare of the population. 

In order to support these public policies, the BCH maintained its Monetary Policy Rate (TPM) at 3.00% to promote favorable financial conditions and support economic recovery. These conditions have been complemented with resources channeled through the BCH-Banhprovi Investment Fund, aimed at supporting productive activities by improving financing conditions (amount, term and interest rates). Nevertheless, to contain second round inflationary pressures and strengthen the country's external position, the relevance and effectiveness of the different monetary policy instruments was evaluated, so that during 2022, the BCH reduced the additional excess liquidity through open market operations. Later in 2023, the rates of the Permanent Credit Facility, the BCH Securities and the legal reserve were increased. 

During 2024, credit growth to the private sector in the monetary sector has been moderate, but growth rates still have remained high. These resources have been destined mainly to financing the real estate, goods & services, trade and industry sectors, as well as consumption. Due to the previously explained context; to be able to face domestic inflationary pressures and preserve the country's external position, the BCH determined to increase the level of the TPM to 4.00%. The BCH will continue to evaluate the economic situation and adjust its policies as necessary to meet its fundamental objective 

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