Dominican Republic Monetary Policy January 2021

Dominican Republic

Dominican Republic: Central Bank keeps rates steady in January

January 31, 2021

At its end-January meeting, the Central Bank (BCRD) kept the policy rate at 3.00% for the fifth month running, following easing last year in the form of liquidity injections and 150 basis points of rate cuts.

The decision not to cut further was likely influenced by improving domestic and external dynamics lessening the need for further stimulus: Domestically, the contraction in economic activity moderated in December, while externally, many economies performed better than expected towards the end of last year, and the vaccine rollout is supporting optimism over global growth ahead.

In its communiqué, the BCRD maintained its neutral position and did not provide explicit guidance on the future direction of interest rates. It reiterated that it would continue to monitor the impact of the coronavirus pandemic on economic stability, and that it was focused on maintaining low inflation and a stable currency. The Consensus is for rates to be slightly above their current level by end-2021, as the economic recovery allows the Bank to withdraw some stimulus.

Our panelists see the policy rate ending 2021 at 3.25% and 2022 at 4.00%.

Author:, Economist

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Dominican Republic Monetary Policy Chart

Dominican Republic Monetary Policy January 2021

Note: Central Bank policy rate in %.
Source: Dominican Republic Central Bank.

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