The Central bank of the Dominican Republic (BCRD) cut its monetary policy interest rate by a further 50 basis points to 5.25 percent as it still expects inflation to remain below the lower limit of its target range for 2015.
It is the second consecutive cut by the BCRD, which also cut its rate by 50 basis points on March 30 after holding rates steady in 2014.
Headline inflation in the Caribbean nation fell to 0.63 percent in March from 1.02 percent in February, well below the central bank's target of 4.0 percent, plus/minus 1 percentage point.
The economy of the Dominican Republic is evolving favorably, the bank said, saying the monthly IMAE indicator of economic activity rose by an annual 6.5 percent in the first two months of the year while the annual growth in credit extended to the private sector in Dominican peso was around 12.5 percent in April, the BCRD said in a statement from April 30.
In the fourth quarter of 2014 the Gross Domestic Product of the Dominican Republic, which lies east of Haiti, expanded by an annual 6.60 percent, slightly below 6.8 percent in the third quarter.
Commenting on fiscal policy, the BCRD said the government aimed at a deficit of around 2.4 percent of Gross Domestic Product in 2015 while data point to a current account deficit of around 2.0 percent of GDP by the end of this year, allowing the accumulation of international reserves above those planned.