The Central Bank of the Dominican Republic (BCRD) left its monetary policy rate steady at 4.50 percent for the third month, saying domestic demand is continuing to react favorably to the expansive monetary policy measures it has taken since June and energized private credit, which has risen 11 percent so far this year and 12 percent in the last 12 months.
BCRD cut its policy rate three times in a row by a total of 100 basis points in June, July and August and released more than 34 billion Dominican peso in legal reserves to productive sectors.
Economic activity has improved with growth of 5.2 percent year-on-year in October following 5.1 percent growth in September for average growth in the first 10 moths of 4.8 percent.
“The dynamism that economic activity has registered in recent months will contribute to economic growth of around its 5.0 percent potential by the end of the year, ” BCRD said, confirming its forecast from September after a monetary policy meeting on Nov. 29.
Inflation in the Dominican Republic rose to 2.48 percent in October from 2.02 percent in September but remains below BCRD’s lower limit of its target range of 4.0 percent, plus/minus 1 percentage point.
The Dominican peso fell fast between mid-September and mid-October but since then it has firmed slightly. Today it was trading at 52.9 to the U.S. dollar, down 4.7 percent this year.
The central bank said the exchange rate had been relatively stable, depreciating less than the average Latin American currency and emerging economies due to the strength of macroeconomic fundamentals and the credibility of economic policies.