The Central Bank of the Dominican Republic (BCRD) held its key interest unchanged at 5.0 percent as inflation is forecast to remain within the central bank's target range this year and in 2014.
BCRD, which cut it benchmark Monetary Policy Reference (MPR) rate by 175 basis points in 2012, said its inflation target for 2013 is 5.0 percent, plus/minus one percentage point, and 4.5 percent for 2014, also with a one percentage point band.
The economy of the Dominican Republic expanded by around 4 percent in 2012, above the average for Latin America, based on a moderate recovery in the second half of the year but still below trend, the central bank said.
The Dominican Republic's Gross Domestic Product rose by 3.9 percent in the third quarter, compared with a 3.8 percent growth rate in both the first and second quarters.
The central bank said it expects the country's production to remain below potential this year and then expand further in 2014 "supported by an improvement in private consumption and investment, as total credit recovers and boosts economic activity," the bank said in a statement from Jan. 31.
The inflation rate in the Dominican Republic rose slightly to 3.9 percent in December from November's 3.7 percent and the impact on inflation from tax reform is estimated to be temporary so inflation will remain around the bank's goal this year.