Dominican Republic: Central Bank hikes interest rates for second consecutive meeting
October 15, 2010
In September, consumer prices increased 0.77% over the previous month, which was up from the 0.22% rise recorded in August. The reading reflected increasing prices for education, due to the beginning of the school year in September, as well as for food, alcoholic beverages and tobacco. As a result of the monthly price rise, annual headline inflation stepped up from 5.0% in August to 5.7%. Meanwhile, at the latest meeting on 29 October, the Central Bank decided to increase the monetary policy rate by 25 basis points, from 4.75% to 5.00%. The move marks the second consecutive hike after the Central Bank had refrained from raising interest rates since September 2009. According to monetary authorities, the present measure has to be considered ?preventive?. The current monetary policy setting aims at avoiding that demand-pull pressure pushes inflation above the 5.0% - 6.0% target range set by the Central Bank for 2011. At the current rate, inflation remains below the 6.0% - 7.0% target range the Central Bank has set for 2010.
Author: Armando Ciccarelli, Head of Data Solutions