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No. 2022-040
In response to the monetary tightening on the international financial markets
CBCS further increases the pledging rate
Willemstad/Philipsburg – The Centrale Bank van Curaçao en Sint Maarten (CBCS) will tighten its monetary policy stance further by raising the pledging rate by 125 basis points to 4.75%. The pledging rate is the rate at which commercial banks can borrow at the CBCS in case of a liquidity shortage. The current increase in the pledging rate is consistent with a projected further rise of interest rates on the international financial markets, particularly the fed funds rate. Although still solid, gross official reserves and the import coverage have been showing a declining trend over the course of 2022 and are expected to further decline in 2023. Therefore, the Monetary Policy Committee (MPC)[1] of the CBCS will continue to monitor the economic and monetary developments in the monetary union closely and tighten the monetary policy stance further if warranted.
[1] The Monetary Policy Committee discusses the economic and monetary developments and the monetary policy stance at least on a quarterly basis. The Monetary Policy Committee takes decisions on the monetary policy stance and the deployment of monetary policy instruments that are ratified by the Board of Executive Directors of the CBCS.