Dominican Republic: Central Bank keeps rates steady in July
July 30, 2021
At its end-July 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 eased somewhat in June, 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.
In its communiqué, the BCRD did not provide explicit direction on future interest rate movements. That said, the Bank sounded slightly more hawkish than at its prior meeting, mentioning that it would closely monitor the evolution of imported inflation and was prepared to adopt the “necessary measures” in order to meet the inflation target. The Consensus is for some tightening by year-end, amid an increasingly bright economic panorama and as the Bank looks to contain price pressures.
Author: Oliver Reynolds, Economist