Dominican Republic: Central Bank continues tightening cycle in July
July 31, 2022
At its 31 July meeting, the Central Bank of the Dominican Republic (BCRD) raised its policy rate by 50 basis points to 7.75%. July’s hike marked the seventh since November 2021, totaling 425 basis points.
Mirroring it’s June release, the BCRD’s decision in July came amid elevated price pressures exacerbated by the Russia-Ukraine war. Inflation remained stable in June from May’s 9.5% rise but remained notably high due to persistent supply chain disruptions, higher transport costs and higher fuel costs. Although core inflation shows signs that it could ease in the coming months, risks remained tilted to the upside. Moreover, a strong economic performance coupled with a robust labor market further cemented the decision to continue the tightening cycle.
In its July release, the BCRD once again highlighted that the economy had sound fundamentals that would enable it to withstand further shocks. This potentially hints at a continuation of the tightening cycle in the coming months. All of our panelists project that the Bank will raise rates by varying degrees by the end of the year.
Author: Jonuel Pérez, Junior Economist