Sunday, February 5, 2012

Central Bank of the Dominican Republic Holds at 6.75%

The Central Bank of the Dominican Republic held its Monetary Policy (Overnight) Rate unchanged at 6.75%, and maintained the Lombard Rate at 9.00%. The Bank said: "Domestically, private credit, economic activity and inflation are performing in line with projections published in the recent Monetary Policy Report. Credit to the private sector continues to expand at a rate close to projected nominal GDP, so preserving the growth of domestic demand. At the same time, forecasts suggest the convergence of y-o-y CPI inflation to its target during the first quarter of 2012, indicating that, even in the midst of an election cycle, price stability and the continuity of macroeconomic policies will be maintained, creating an environment of certainty that facilitates decision-making among private sector economic agents."

The Bank last raised the rate by 50 basis points in April, 25 basis points in March, and 100 basis points in February last year; the bank also reduced its Lombard Rate by 50bps to 9% in November last year. The Bank said annual inflation was 7.8% in December, compared to 6.17% in January 2011, this compares to the inflation target of 5.5% +/- 1% for CPI during 2012 (adopted under the inflation targeting framework).

The Dominican Republic's currency, the Dominican peso (DOP), has weakened by about 4% against the US dollar over the past year, while the USDDOP exchange rate last traded around 38.88.


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