Central Bank freezes interest rates for the fifth time at 8.5%

The Central Bank of the Dominican Republic (BCRD) has decided to maintain interest rates unchanged for the fifth consecutive time, at 8.5%, as announced by the central body in a statement after its monetary policy meeting.

This decision has been made in accordance with the evolution of inflation in the country, which fell by almost one point in February, to 6.4% year-on-year. Such a low figure has not been given since January 2021. For its part, the underlying figure also fell to 6.4% year-on-year, two tenths less than in January.

The last rise in interest rates in the Dominican Republic took place at the end of October, when the figure was increased by 25 basis points, up to the current rate. In September, the last month with data at that time, year-on-year inflation climbed to 8.6%.

Under current forecasts, the central bank has estimated that the monetary policy rate is at the level "appropriate" so that inflation converges to the target of 4% in 2023, as long as the monetary policy transmission mechanism continues to operate and the "dissipating" the conjunctural factors that have affected the volatile component of prices.

Given the financial turmoil recently observed in international markets, the organization has explained that the Dominican financial system does not have direct exposure to any of the financial institutions that have presented problems, in addition to finding high levels of solvency and capitalization, with low delinquencies and "excellent" profitability levels.

Along these lines, the central bank has highlighted that inflation is responding "favorably" to the monetary restriction program and to the subsidies implemented by the Government. However, it has reaffirmed its "commitment" to monitor economic conditions, to take appropriate measures "necessary" that preserve macroeconomic stability.

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