With the economy expanding by only 0.3% in the first quarter of the year, less than expected, the Central Bank has announced it is lowering the benchmark interest rate from 5 to 4.25%. This is the fourth time the Central Bank has lowered the overnight rate. Governor Hector Valdez Albizu says policymakers do not foresee any inflationary pressures in the next few months. Annual inflation was 4.9%, within the Central Bank’s target range of 5% plus or minus one percentage point.
“Production has been below its potential capacity and during the January-March quarter the growth rate was below the average from previous years as a result of weakened internal demand,” policy makers said. “Macroeconomic models indicate that if measures are not taken, production will remain below potential until the end of 2014.”
The decision is expected to continue to stimulate a decline in interest rates for consumer spending and construction.
www.bancentral.gov.do/notas_pm.asp?a=bc2013-05-26