The Central Bank of the Dominican Republic (BCRD) announced on 29 August 2024 the reducing of its monetary policy interest rate by 25 basis points. The rate was lowered from 7.00% to 6.75% per annum. The overnight rate was reduced from 5.50% to 5.25%.
The monetary policy interest rate is set by the Central Bank to control inflation and stabilize the economy. In contrast, the overnight rate is the interest rate at which banks lend and borrow money from each other overnight.
The rate adjustments were decided during the Central Bank’s August 2024 monetary policy meeting. The BCRD’s decision to reduce the interest rate reflects the bank’s assessment of a favorable economic outlook, both domestically and internationally.
The BCRD has been implementing a liquidity provision program, channeling over RD$199 billion in loans to the private sector at interest rates of up to 9.0% per annum.
The BCRD cited several factors for this rate cut, including:
• Global economic outlook: The bank noted the expectation of easing global financial conditions and the resilience of the US economy, projecting a 2.5% growth for 2024.
• Domestic economic performance: The Dominican Republic’s economy has shown strong performance, with a gradual moderation in private credit growth.
• Inflation: Inflation in the Dominican Republic has remained within the target range of 4.0% ± 1.0% for the year, with the interannual rate decreasing to 3.54% in July.
The global economic landscape has seen a moderation in inflation in major economies like the United States and the Eurozone. The US Federal Reserve is expected to initiate interest rate cuts in September, while the European Central Bank is also anticipated to resume its rate reduction program.
The Dominican Republic’s economy is projected to grow around 5% in 2024, supported by strong fundamentals such as tourism, free zone exports, remittances, and foreign direct investment.
Read more in Spanish:
Central Bank
2 September 2024