The recent increase in the monetary policy rate (MPR) announced by the central bank to reduce liquidity in the financial market and control inflation, it will be reflected in the coming months in deposit and asset interest rates, in addition to being reflected in public debt bonds.
The Economist Antonio Ciriaco Cruz, stated that For the next three months, the average active interest rate (on loans) could be between 15% and 17%.
He indicated that this latest increase in the monetary policy rate is deliberately causing a “unnecessary” recession in the economy considering that the current inflation in more than 70% is not of monetary origin, but rather it is an inflation subject to fuel and energy costs, a situation related to the war between Russia and Ukraine.
The recently elected dean of the Faculty of Economic and Social Sciences of the Autonomous University of Santo Domingo (UASD) pointed out that the Central Bank increasing the MPR may affect core inflation, which is one that depends on a purely monetary component, but he said that This inflation depends on the offer, the supply chain and the rise in the price of commodities.
Ciriaco Cruz pointed out that sIf the Central Bank continues with this policy, it will be causing a reduction in economic activity and a slowdown in job creation, which will imply lower economic growth, which is already projected at 4.2%.
The Economist Miguel Collado Di Franco, from the Regional Center for Sustainable Economic Studies (CREES)pointed out that, in addition to the impact that the rise in the MPR to 7.25% will have on deposit and asset interest rates, the same will affect the national public debt by the rises in interest rates at the international level, especially those of the Federal Reserve, as well as by the increase in PM made by the Central Bank.
From 6.5 to 7.25%
The Central Bank announced this Thursday the increase in the Monetary Policy Rate (TPM) from 6.50% to 7.25%, as a measure to curb the wave of inflation that is affecting the economies.
In the Dominican Republic, year-on-year inflation stood at 9.47% in May, while core inflation was at 7.29%.