The central bank of the Dominican Republic (BCRD) reported this Friday that, at its meeting of monetary politics April, decided to keep his interest rate at 5.50% per year.
In this way, the rate of the permanent facility for liquidity expansion (1-day repos) remains at 6.00% per year and the interest-bearing deposit rate (overnight) at 5.00% per annum.
“This decision is based on an exhaustive evaluation of the recent behavior of the world economy, which has been influenced by the increase in international uncertainty derived from the recent geopolitical conflicts and the global cost shock”reported the institution.
He added that price dynamics continue to be affected by external shocks that are more persistent than expected, associated with the notable increase in oil prices and other important raw materials for local production, as well as the high costs of international container transport and other disruptions in supply chains.
The BCRD has increased its interest rate monetary politics by 250 basis points from November 2021, to its current level of 5.50% per year, in line with the cycle of increases in interest rates at the international level.
“From the end of the year 2021 the central bank has been implementing measures to counteract external shocks on prices and contribute to the convergence of inflation to the target range, in a context of economic dynamism,” he said.
The institution highlighted that the monthly variation of the consumer price index (CPI) in March 2022 was 0.67%; while year-on-year inflation, that is, in the last 12 months, stood at 9.05%.
On the other hand, year-on-year core inflation, which excludes the most volatile components of the basket, stood at 6.99% in March, reflecting second-round effects on production associated with external supply shocks.
On the other hand, the monetary organization indicated that the international environment has significantly increased uncertainty due to Russia’s invasion of Ukraine. In this context, in its most recent update of the World Economic Outlook, the International Monetary Fund (IMF) revised downwards the global growth forecasts for the current year 2022 from 4.4% to 3.6%.
The central bank says that in the domestic environment, the good performance of the economy has been maintained during this year, registering a growth of the Monthly Index of Economic Activity (IMAE) of 6.4% during the month of March, which, together with the expansions of 6.3% in January and 5.8% in February, they accumulate a growth of 6.1% during the first quarter of 2022.
The institution highlighted that the Dominican economy is in a good position to mitigate this adverse shock, taking into account the strength of the macroeconomic fundamentals, the good performance of domestic demand and the high levels of international reserves.
“The central bank of the Dominican Republic reaffirms its commitment to lead the monetary politics towards the achievement of its inflation goal and the proper functioning of the financial and payment systems, for which it will continue to monitor the international situation and inflationary pressures, with the purpose of adopting additional measures in the face of factors that may put at risk price stability”.
