At its monetary policy meeting in February 2021, the Central Bank of the Dominican Republic (BCRD) decided to take action. its interest rate monetary policy and 3.00% annually.
In this way, the permanent liquidity expansion fee (Repos to 1 day) is fixed at 3.50% annually and the bag of remunerated deposits (overnight) and 2.50% per annum, send a communication from the financial entity.
The decision on the reference case is based on the exhaustive analysis of the impact of COVID-19 on economic activity and the future evolution of inflation. In particular, the monthly variation of the consumer price index (IPC) in January at 0.97%, while the inter-annual inflation associated with the analytical series of the new reference base (October 2019-September 2020), which is the most relevant for monetary policy decisions, is expected to reach 5.35% by 2021.
Assimilation, the high inflation rate, which excludes the most volatile components of the baseline, increased 4.93% by the end of 2021.
The recent dynamics of Inflation has been influenced by cost shocks that have affected local food production, as a result of the impact of climatic phenomena, in addition to increments of the prices of imported foodstuffs, such as the trio, corn, soybeans and sorghum, as well as the major international prices of petroleum.
It is important to note that, despite these exogenous factors, the BCRD’s prognostic system indicates that inflation is exacerbated by the transition to a higher limit over the next few months, in order to easily converge paulatina to 4.0%. ± 1.0% during the second half of the year.
These inflation projections, the expectations of the economic agents based on the meta and the strength of the macroeconomic foundations, provide the space for the Central Bank to maintain favorable monetary conditions with the proposal of continue supporting economic reactivation.