Dominican Republic

Dominican Republic Monetary Policy November 2019

Dominican Republic: Central Bank keeps rates unchanged in November as inflation and growth recover

At its 29 November monetary policy meeting, the Central Bank (BCRD) left the policy rate unchanged at 4.50% for the third straight month, following 100 basis points of easing in June–August to boost economic activity.

The Bank’s decision to stay put was motivated by the recent recovery in economic growth, which accelerated for the fourth month running in October. Moreover, inflation has risen closer to the 3.0%–5.0% target range, and is expected to track near the center of the range in 2020. With past monetary easing having the desired effect of boosting growth and inflation , further rate cuts were not deemed necessary.

In its communiqué, the Bank’s dovish guidance was unchanged. The BCRD stated it would be alert to “moderating global economic activity as well as internal and external uncertainty, and the impact on demand”. This suggests further loosening is possible in the near-term, a scenario penciled in by some panelists. Analysts at JPMorgan, for instance, state: “we still expect 50bp more by the end of 1Q20.” However, the positive evolution of inflation and economic activity could reduce the need for further cuts.

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