Price dynamics continue to be affected by more persistent external shocks than anticipated, associated with the significant increase in oil prices and other raw materials important to local production, as well as high international container transport costs and other disruptions in supply chains.
SANTO DOMINGO- The Central Bank of the Dominican Republic (BCRD) announced that it has decided to maintain its monetary policy interest rate at 5.50% per year.
This decision, according to a statement from the organization, is based on a comprehensive assessment of the recent performance of the global economy, which has been influenced by increased international uncertainty stemming from recent geopolitical conflicts and the global cost shock.
Price dynamics continue to be affected by more persistent external shocks than anticipated, associated with the significant increase in oil prices and other raw materials important to local production, as well as high international container transport costs and other disruptions in supply chains.
The report notes that the monthly variation of the consumer price index (CPI) in March 2022 was 0.67%; while the year-on-year inflation, that is, in the last 12 months, stood at 9.05%.
In this regard, the BCRD's forecasting system indicates that, in an active monetary policy scenario, inflation would gradually converge to the target range of 4% ± 1% during the monetary policy horizon, but at a slower pace than anticipated, the institutional statement specifies.
He adds that in addition to monetary normalization policies, the fiscal measures being implemented to mitigate the increase in commodity prices and the stability observed in the foreign exchange market are elements that would facilitate the convergence of inflation to the target.
Measures
The statement establishes that since the end of 2021 the Central Bank has been implementing measures to counteract external shocks on prices and contribute to the convergence of inflation to the target range, in a context of economic dynamism.
In this regard, it says, the organization has increased its monetary policy rate by 250 basis points since November 2021, to its current level of 5.50% per year, in line with the cycle of increases in interest rates internationally.
In addition, the Central Bank of the Dominican Republic (BCRD) has significantly reduced the excess liquidity in the financial system through open market operations and the gradual return of resources that had been granted during the pandemic.
Growth
The Central Bank of the Dominican Republic (BCRD) highlights that the domestic economy has maintained its strong performance this year, registering a 6.4% growth in the Monthly Index of Economic Activity (IMAE) in March, which, together with the 6.3% expansion in January and the 5.8% expansion in February, accumulates a growth of 6.1% during the first quarter of 2022.
Source: Listín Diario
