WILLEMSTAD - The Central Bank of Curaçao and Sint Maarten (CBCS) has lowered its policy interest rate by 0.25 percentage points, bringing it down to 4.50 percent. The move aligns with the recent rate cut by the U.S. Federal Reserve, reflecting similar economic considerations in the monetary union.
Strong Reserves Allow Easing
The CBCS said the rate cut was made possible by the island’s strong financial reserves, which grew by 216 million guilders in the first eight months of this year. The bank expects total reserves to remain well above the required threshold by the end of 2025 — covering 4.8 months of imports, compared to the minimum requirement of three months.
According to the CBCS, the local economy is expected to improve further this year. The current account deficit on the balance of payments is projected to shrink from 16.4 percent to 12.8 percent of GDP, driven by higher tourism and transport revenues, lower oil prices, and stronger foreign inflows. However, the bank also noted that imports are rising due to robust domestic demand.
Caution Amid Global Uncertainty
Despite the positive outlook, the CBCS warned of global uncertainties that could affect Curaçao and Sint Maarten’s open economies. It cited trade tensions, the U.S.–Venezuela conflict, and ongoing wars in Ukraine and the Middle East as potential risks that could drive up import prices. The unpredictability of U.S. monetary policy also remains a concern.
“The decision to lower the rate reflects a careful balance between monetary easing in the United States and local economic conditions,” the CBCS said in a statement.
The reserve requirement for commercial banks remains unchanged at 18.5 percent. The CBCS will continue to manage excess liquidity locally by offering attractive interest rates in its weekly auctions.
New Monetary Policy Committee
Since July 1, CBCS President Richard Doornbosch has chaired the newly established Monetary Policy Committee, responsible for preparing key monetary decisions. The committee also includes Professor Jakob de Haan of the University of Groningen, who joins as an external member, bringing extensive expertise in monetary economics to the CBCS’s policy framework.
With its latest policy move, the CBCS aims to support economic stability and growth while maintaining sufficient buffers against external shocks in the region.
