Central Bank keeps benchmark rate at 5% on upbeat trends

Santo Domingo.- Dominican Republic’s Central Bank on Mondayannounced that its benchmark rate will remain at 5% annually, a decision it affirmstook into account the balance of risks around inflation forecasts, marketexpectations and the global environment.

"In June the annual rate of inflation stood at 1.91%,remaining below the target range. The annual core inflation associated withmonetary conditions, stood at 1.62%. Forecasting models predict that inflationwould converge to the target of 4.0% ± 1.0% at the monetary policy horizon of24 months," the Central Bank said in an emailed statement.

It said the disturbances emerged after Brexit ininternational financial markets, mainly Europe, prompted a rebound of stockindexes, while capital flows to emerging economies have increased. “The dollar,the international reserve currency, remains strong and is expected to continueto appreciate in the coming months. Oil and gold prices, important minerals forthe Dominican economy remain in the vicinity of US$45 per barrel and US $1.300troy ounce respectively.”

The Central Bank said local economic activity anddomestic demand, “observed a positive trend in the short term by experiencing ahigher growth potential, together with a range of low and stable prices.”

It adds that credit to the private sector in domesticcurrency grows an annual rate of around 11.3% to July. “Total loans to theprivate sector, including foreign currency funding, expands around 13.6% duringthe same month, above the nominal GDP growth.”