Monetary policy interest rate decreased by 0.25 to 6.50%

As a result of the monthly monetary policy meeting, the central bank decided to reduce the monetary policy rate by 25 basis points, decreasing from 6.75% to 6.50% annually.

Likewise, the Perpetual Liquidity Expansion Facility rate (one-day repo agreements) decreased from 7.25% to 7.00% per annum, while the interest rate (overnight) deposits decreased from 5.25% to 5.00% per annum.

The Monetary Policy Authority indicated, in a memorandum, that to take this measure, the recent development witnessed by the international environment was taken into account, especially the spaces available as a result of lower interest rates in the more advanced economies and lower material prices. Insurance premiums.

He noted that, in addition, the good performance of the Dominican economy and the gradual convergence of the pace of expansion of national currency credit with the growth of nominal GDP were considered, in a context in which inflation during the current year period continued to be in the lower section of the target range of 4.00 ± 1.0%.

He explained that the country’s annual inflation has declined significantly, reaching 3.42% in August 2024. Likewise, core inflation, which excludes the prices of the more volatile components of the basket and is more directly linked to monetary conditions, remains at target, at 4.05%. In August 2024.

The Central Bank stated that forecast models indicate that general and core inflation will remain within the target range, on the monetary policy horizon.

Macroeconomic data DR

The central bank explained that at the national level, the economy expanded by 5.6% year-on-year in August this year, driven mainly by the financial services sectors (8.7%), mining and quarrying (8.5%), and the regional industrial franc. (8.1%) and construction (6.9%).

As a result, growth over the period from January to August averaged 5.1%, which is close to its potential, the entity noted.

He stressed that during this period, good performance emerged for the financial services sectors (8.1%), hotels, bars and restaurants (7.1%), as well as free zone manufacturing (6.6%) and construction (4.9%).

anticipation

The Dominican economy is expected to maintain growth of about 5% in 2024, one of the highest expansions in the region, according to international organizations such as the International Monetary Fund and the World Bank, the central bank said in the memo. and the Economic Commission for Latin America (ECLAC).

He pointed out that the pace of expansion of credit in the national currency continued to gradually moderate, reaching about 14% on an annual basis. In this sense, the growth rates of private loans and broader monetary aggregates have maintained a gradual convergence with nominal GDP growth, in accordance with the provisions of the central bank’s monetary programme.

Foreign exchange generating activities continue to record positive behavior even in the context of uncertainty in the international environment, with tourism, exports from free zones, remittances and foreign direct investment highlighted.

With this arrangement, the relative stability of the exchange rate was maintained, with a cumulative depreciation of about 3.3% in September, while international reserves reached about 14.9 billion US dollars in August, equivalent to about 12% of GDP. ) and about six months of imports, which exceeds the standards recommended by the International Monetary Fund.