The Central Bank of the Dominican Republic (BCRD), at its monetary policy meeting this November, decided to increase its monetary policy interest rate by 50 basis points, from 3.00% to 3.50% per annum. As a result, the rate for the permanent liquidity expansion facility (1-day repos) increased from 3.50% to 4.00% per annum, and the rate for remunerated deposits (overnight) increased from 2.50% to 3.00% per annum.
SANTO DOMINGO – Following the clarification by the Central Bank of the Dominican Republic (BCRD) that interest rates would not increase, the ABA, the Association of Multiple Banks of the Dominican Republic, declared yesterday that the recent increase in the monetary policy rate ordered by the country's regulatory body, accompanied by the gradual withdrawal of liquidity that has been underway, has a transmission channel in bank interest rates, which will be reflected gradually, including in passive rates, that is, the rate paid to savers and depositors.
In a statement, the ABA highlighted that monetary stimulus measures of nearly 5% of Gross Domestic Product (GDP), some RD$215 billion in liquidity facilities, “allowed multiple banks to play a leading role by providing credit in local currency to the private sector, with a 400 basis point decrease in interest rates.” This enabled, the Association indicated, the refinancing and restructuring of more than 50% of the loan portfolio, under better conditions to alleviate the financial burden on SMEs, productive sectors, and households.
“As the Central Bank of the Dominican Republic clarified, the liquidity facilities provided by that institution allowed all these restructurings and refinancings to be granted at rates around eight percent and with a fixed term of three years. Therefore, this strategy makes a significant difference,” the association said.
The Central Bank of the Dominican Republic, at its monetary policy meeting this November, decided to increase its monetary policy interest rate by 50 basis points, from 3.00% to 3.50% per annum. As a result, the rate for the permanent liquidity expansion facility (1-day repos) increased from 3.50% to 4.00% per annum, and the rate for remunerated deposits (overnight) increased from 2.50% to 3.00% per annum.
The Central Bank of the Dominican Republic (BCRD) stated that the funds it provides to financial intermediaries through the Rapid Liquidity Facility (FLR) will maintain an unchanged interest rate of 3.0% per annum until maturity. Likewise, the facilities provided through the Repurchase Agreement Financing Window will maintain an interest rate of 3.5% per annum. Therefore, the interest rates on loans channeled by these entities to productive sectors must remain at up to 8% per annum, unchanged until maturity. For households and SMEs, the rates will remain competitive and originally agreed upon between the entities and the borrowers, in accordance with the costs inherent to these market segments.
