Economic Analysis - Rising Inflation Will Not Alter BCN Policy - 22 MAY 2017

BMI View : W e expect the Banco Central de Nicaragua will continue to devalue the cordoba at a steady pace in the next two years , in spite of spiking consumer price inflation . Inflation will be driven by rising energy prices as subsidised fuel from Venezuela dries up.

Price growth in Nicaragua will accelerate substantially in the next year, driven by rising energy prices and remittance inflows. However, this will not spur the Banco Central de Nicaragua (BCN), whose mandate is to ensure stability in the national currency and does not have a benchmark interest rate, to change its current policy. We expect the bank will continue to steadily devalue the Nicaraguan cordoba (NIO) in the next two years, in line with the strategy it has maintained since 2007.

Inflation To Spike On Venezuela Contagion

Inflation Has Bottomed, Will Head Higher
Nicaragua - Consumer Price Inflation
Source: BCN, BMI

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