Honduras monetary policy rate increase

The Central Bank of Honduras (BCH) increased its Monetary Policy Rate (TPM) by 25 basis points, raising it from 5.75% to 6.00%. BCH President Roberto Lagos characterized the adjustment as a “preventive and calibrated measure” intended to contain inflation, which was reported at 6.20% in August, and to move toward a neutral monetary position.

The decision has met with mixed reactions from economic experts and industry groups. The Honduran Association of Banking Institutions (AHIBA) supported the measure to protect citizen purchasing power, noting that commercial rates would be adjusted gradually based on market variables.

Conversely, some economists expressed concern regarding the impact on the economy. Critics warned that higher rates could increase the cost of credit and discourage investment in sectors like agriculture, industry, and construction. Additionally, concerns were raised regarding the rising cost of the basic food basket and the potential contradiction between the rate hike and the management of banking liquidity.

Following the adjustment, banking officials and economists have clarified that the increase will not result in an immediate or automatic rise in consumer loan rates. Instead, any impact on credit costs for households and businesses is expected to be gradual, as individual banks determine rates based on specific liquidity, funding costs, and market conditions. Estimates suggest the transmission of this policy could take between four and six months to manifest in the broader economy. Experts noted that while the move is viewed as a technically correct measure to stabilize prices, external factors such as global economic uncertainty and food sector conditions will continue to influence inflation.