Dominican Republic: Inflation dims in July, Central Bank stays put
August 31, 2018
Consumer prices fell 0.02% in July over the previous month, contrasting June’s 0.21% rise. According to the Central Bank, July’s figure was driven by lower prices for food and non-alcoholic beverages; and clothing and footwear.
Inflation ticked down from 4.6% in June to 4.4% in July, still slightly above the midpoint of the Central Bank’s inflation target range of 3.0%–5.0%. Core inflation, which excludes volatile items such as certain types of food, fuel and administered prices, came in at 2.6%.
At its 31 August monetary policy meeting, the Central Bank kept its main policy rate at 5.50%, after hiking rates for the first time in a year at the previous meeting in the context of above-potential growth and inflation in the upper half of the 4.0%-6.0% target range. However, the Bank made explicitly clear that it was prepared to continue hiking rates in the months ahead in order to contain price pressures, and in response to foreseeable further monetary tightening by the U.S. Federal Reserve.
Author: Oliver Reynolds, Economist