The Central Bank of the Dominican Republic (BCRD) once again raised its monetary policy rate, which is a reference rate. This time it went from 4.50 to 5.00% per year (50 basis points).
It made the decision at its monetary policy meeting in January 2022, as reported yesterday night in a press document.
He said that the measure of raising the rate is part of the monetary policy normalization plan that is being implemented with the purpose of moderating the shocks on prices and contributing to the convergence of inflation to the target range, in a context of high dynamism. of economic activity.
The new increase of 50 basic points in the monetary policy rate, together with the increase of 150 basic points in the months of November and December, place the reference rate at 5.00% per year. In this way, the rate of the permanent liquidity expansion facility (1-day repos) increases from 5.00% to 5.50% per year and the interest-bearing deposit rate (Overnight) from 4.00% to 4.50% per year.
The bank reiterated yesterday that it is committed to conducting monetary policy towards the achievement of its inflation target and the proper functioning of the financial and payment systems. He guaranteed that he will continue to closely monitor the macroeconomic environment and the evolution of inflationary pressures, with the purpose of adopting the necessary measures in the face of factors that may put price stability at risk.
This decision, according to the issuer, is based on an exhaustive evaluation of the behavior of the world economy, the greater persistence of inflationary pressures and the perspectives of international financial conditions.
“In that order, price dynamics continue to be affected by external shocks that are more permanent than expected, associated with higher prices for oil and other important raw materials for local production, as well as the increase in the global cost of transporting goods. containers and other disruptions in supply chains,” said the BCRD.
In its most recent update of the World Economic Prospects, the International Monetary Fund (IMF) revised downwards the global growth forecasts for the current year 2022 from 4.9% to 4.4%.
“In the United States of America, our main trading partner, the economy expanded by 5.7% in 2021, projecting growth of 4.0% by 2022, according to the IMF. Meanwhile, inflation in that country reached 7.0% in December, the highest in almost four decades and more than three times above its 2.0% goal. In this context, the Federal Reserve in its most recent meeting indicated that it would end its monthly financial asset purchase program in March and that it foresees increases in the federal funds rate in the near future,” the bank said in its document. of press.
He assured, on the other hand, that economic activity in the Euro Zone expanded by 5.2% in 2021 and a growth of 3.9% is projected in 2022, according to the IMF. Meanwhile, inflation stands at 5.0% in December 2021, the highest in the history of this bloc of countries. Although the overnight deposit rate remains at -0.50% per year, the European Central Bank announced that the emergency program for the purchase of financial assets due to the pandemic would end in March 2022.
