Dominican Republic: Central Bank leaves rates unchanged in February but is monitoring the coronavirus fallout
February 28, 2020
At its February monetary policy meeting, the Central Bank (BCRD) left the policy rate unchanged at 4.50% for the sixth straight month, following 100 basis points of easing in June–August 2019 to boost economic activity.
The decision to stay put was underpinned by inflation which has remained within the BCRD’s 3.0%–5.0% target range in recent months and robust domestic momentum. Moreover, the Bank expected inflation to remain on-target this year and forecast GDP growth to be close to potential.
In its communiqué, the Bank remained dovish, and made specific reference to the coronavirus in its forward guidance section for the first time. The likely impact of the virus on the domestic economy, looser monetary policy from key Central Banks such as the U.S. Fed, and the recent plunge in oil prices all raise the possibility of near-term easing by the BCRD.
Author: Oliver Reynolds, Economist