The Constitution of Honduras in Article 342 and the Law of the Central Bank of Honduras (Decree 53) establish the obligation to ensure the maintenance of the internal and external value of the national currency and facilitate the good functioning of the payment system. To this purpose, the Bank’s Board, will formulate, develop and implement the monetary, credit and exchange policy in the country. Annually, the Board approves the Monetary Program, which contains policy guidelines in areas identified by law, which is derived from a comprehensive analysis of the internal and external economic conditions, through indicators generated by the various dependencies of the Bank and their assessment of the future trend of those indicators and the effect that this development will cause on the national currency.
The Board has an internal body, the Committee of Open Market Operations (COMA), responsible for monitoring and implementing the guidelines established by the Board in the Monetary Program, on an ongoing basis, for which they meet at least eight times a year at preset dates (Schedule of meetings) in order to analyze the evolution and prospects of macroeconomic variables, and the behavior and outlook of the various markets, in order to determine the involvement policies of the Central Bank of Honduras in the monetary and financial market. Based on these analyzes, the COMA may bring to the attention of the Board, through the Chairman or of the Management of the Institution, proposals on monetary policy and mechanisms and tools for its implementation. The ongoing monitoring and analysis of economic variables and the fulfillment of the goals on the Monetary Program that the COMA requires to make decisions, is in charge of the Monetary Policy Committee (CTPM), technical body created for this specific purpose (Resolution establishing the CTPM 144). Periodically, the CTPM analyzes a particular set of economic indicators in the overall context of the international economy and makes recommendations aimed at reducing the possible deviations, if any, between the current state of economic variables and the objectives of the Monetary Program.
The main policy instruments used by the COMA for the fulfillment of its objectives are Open Market Operations and the Monetary Policy Rate.
The COMA is committed to fulfilling the objective of obtaining a long-term inflation and moderate interest rates, that will help maintain the internal and external value of the national currency. To contribute to the understanding of its policy recommendations, the COMA seeks to disseminate and explain these recommendations to the public in the most clear and transparent way as possible, knowing that this clarity facilitates informed decision making by households and businesses, reduces uncertainty, increases the effectiveness of monetary policy and democratizes information, fundamental input in shaping expectations for economic agents.
Inflation and interest rates fluctuate in response to a series of economic and financial developments from internal and external sources. These fluctuations have an effect on the level of employment and economic activity. Knowing that monetary policy decisions have influence on these variables with a lag in time, COMA recommendations take into account the risks, including those that may affect the financial system and thus the national payments system.
In making recommendations on monetary policy, the COMA seeks to reduce deviations of inflation (measured by the percentage change in the Consumer Price Index between two time periods) from the objectives on the Monetary Program in a manner consistent with the goals of social economic growth and employment. These objectives are generally complementary, but to the extent that the tendency of the balanced relationship that should exist between the internal and external demand moves away from what is expected, due to factors beyond the control of the Central Bank and loses complementarity, the COMA seeks to establish a balance between the objectives, always taking into account the size and importance of the deviations and the time horizon that is expected to restore economic balance and inflation return to its programmed level.