Central Bank raises benchmark rate from 5.25% to 5.50%
Santo Domingo.- Dominican Republic’s Central Bank on Tues. said it increased its monetary policy interest rate by 25 basis points, from 5.25% to 5.50% per annum, a decision adopted at its monetary policy meeting in July 2018.
It said short-term liquidity management scheme, the rate of overnight deposits increases from 3.75% to 4.00% per annum and the rate of permanent expansion facilities (repos) increases from 6.75% to 7.00 % annually
It stressed that the decision to increase the prime rate was based “on an exhaustive analysis of the balance of risks around inflation projections, the main national macroeconomic indicators, the relevant international environment, market expectations and the medium-term forecasts.”
It also said that accumulated inflation was 1.43% during the first six months, with year-on-year inflation from June 2017 to June 2018 at 4.63%, “above the midpoint of the target range of 4.0% ± 1.0% established in the Monetary Program.”
“Prior to the meeting, inflation forecasts in a passive scenario indicated a gradual upward trend, as a result of higher oil prices, domestic demand pressures and an increase in uncertainty in international financial markets, for which a need for a change of position in the monetary policy that seeks to achieve the goal within the two-year policy horizon,” the Central Bank said.