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Dominican Republic Holds Rate, Attentive To US Fed, Dollar

The Dominican Republic’s central bank kept its monetary policy rate at 5.50 percent, saying it is attentive to the normalization of monetary policy in the United States and its impact on the dollar and the price of oil and is “prepared to react in a timely manner to any factor that can generate inflationary deviations.”

The Central Bank of the Dominican Republic (BCRD), which has maintained its rate since raising it by 25 basis points in July, added inflation is forecast to gradually converge to its target range of 4.0 percent, plus/minus 1 percentage point, over the next year.

Inflation in the Dominican Republic dropped by 0.35 percent in November for accumulated inflation in the first 11 months of 1.39 percent, in line with the bank’s forecast for inflation to end the year at 1.3 percent, BCRD said.

Economic activity is continuing to grow above its potential in the context of an absence of inflationary pressures, the central bank said, adding gross domestic product is estimated to expand by 7.0 percent during the year, driven by investment and private consumption.

The Dominican peso has depreciated steadily this year against the U.S. dollar and was trading at 50.45 to the dollar today, down 5.3 percent this year.

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