Caribbean & Central America - November 2007 (ISSN 1741-4458)

Policymakers are coming under pressure to do something to boost the pitiful interest rates available on savings products. Orthodox economists argue that if savers do not receive real returns they will not save but consume. Currently interest rates in Cólones are half the level they were 12 months ago and now well below the inflation rate. Six month government paper is yielding 6.5% in nominal terms, well below the annual rate of inflation which stands at just under 10%. A year ago, the same paper was yielding 12% and inflation was pretty much the same as it is now. 

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