The Central Bank of the Dominican Republic (CBDR) kept its Monetary Policy Reference (MPR) rate steady at 5.0 percent as inflation is forecast to be within the bank's target this year and next and economic growth is also in line with expectations.
The CBDR, which cut its rate by 175 basis points in 2012 but also left the rate unchanged last month, said the domestic economy expanded by 3.9 percent last year, higher than the average in Latin America and liquidity in international financial markets was good, which could help the flow of capital to emerging economies. In 2011 the Dominican Republic's economy grew by 4.5 percent.
"Credit to the private sector in the national currency continues to show a recovery and projections suggest that by the end of the year the funding would grow faster than nominal GDP," the central bank said, adding that higher credit would allow faster recovery in consumption and private investment.
Inflation in the Dominican Republic rose to by a monthly 1.26 percent in January to an annual rate of 4.76 percent, up from December's 3.9 percent, due to the impact of tax reform, the bank said.
The CBDR targets inflation of 5.0 percent, plus/minus one percentage point in 2013 and 4.5 percent, plus/minus one percentage point, in 2014.