Dominican Republic: Central Bank keeps rates steady in September
September 30, 2021
At its end-September meeting, the Central Bank (BCRD) decided to keep the policy rate at 3.00%.
Although inflation remains above the BCRD’s 3.0%–5.0% target range, the Bank judged that inflation would moderate going forward, albeit at a slower pace than previously predicted owing to persistent external shocks. Together with well-anchored inflation expectations and a relatively stable currency, this gave the Bank the space to keep rates stable in order to support the economic recovery. That said, the Bank said it would continue unwinding the extraordinary liquidity-boosting loans that were introduced in response to the pandemic, in order to keep a lid on inflation.
In its communiqué, the BCRD did not provide explicit direction on future interest rate movements. September’s forward guidance was identical to August’s, with the Bank mentioning that it would closely monitor the evolution of inflation and was prepared to adopt the “necessary measures” in order to meet the inflation target. With the economy continuing to steam ahead, the Consensus is for some tightening going forward.