Dominican Republic: Central Bank keeps rates steady in August
August 31, 2021
At its end-August 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, price pressures continued to ease in July, and the Bank judged that inflation would continue to moderate ahead, aided by recent falls in prices for some key international commodities. Together with well-anchored inflation expectations and a relatively stable currency, this gave the Bank the space to keep its stance accommodative in order to support the economic recovery, which could be threatened somewhat by the rise of the Delta variant.
In its communiqué, the BCRD did not provide explicit direction on future interest rate movements. August’s forward guidance was almost identical to July’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. Thus, a large shift in monetary policy strategy is unlikely. However, with the economy continuing to steam ahead, the Consensus is for some tightening by year-end.