The Central Bank once again reduced its monetary policy interest rate, this time by 25 basis points. The rate dropped from 7.75% to 7.50% per annum. The Central Bank of the Dominican Republic has reduced its monetary policy rate by 100 basis points cumulatively since its May meeting, in an effort to restrain inflation.
The Central Bank also dropped from 8.25% to 8.00% per annum the rate of the permanent liquidity expansion facility (1-day Repos). And, the rate of interest-bearing deposits (Overnight) is reduced from 6.75% to 6.25% per annum. The Central Bank explains that these decisions will contribute to reduce the financing costs of financial institutions and will result in lower interest rates in banking locally.
The measures adopted take into consideration that year-on-year inflation has been significantly reduced and is around the center of the target range of 4.0% ± 1.0%, as a result of the monetary and fiscal policies implemented, as well as lower domestic demand pressures. Inflation is down to 3.95% in July from a peak of 9.64% in April 2022.
The Central Bank is closely monitoring the evolution of the international environment in these times of global uncertainty factors. The monetary authorities expects that the Consensus Forecast growth projection for the United States will most likely to one of more gradual moderation than expected, with an expansion of 1.9% at the end of 2023. The Consensus Forecasts surveys follow GDP growth, foreign currency exchange rates, consumer prices, interest rates and other economic indicators.
4 September 2023