Dominican Republic Central Bank Raises Benchmark Rate to 5.00%

• The Dominican Republic Central Bank increased its monetary policy interest rate by 50 basis points, from 4.50% to 5.00% per year. This resulted in the rate of the permanent liquidity expansion facility (1-day Repos) increasing from 5.00% to 5.50% per year and the interest-bearing deposit rate (Overnight) rising from 4.00% to 4.50% per year. 
• This decision is based on an exhaustive evaluation of the behaviour of the world economy, the greater persistence of inflationary pressures and the perspectives of international financial conditions. 
• The country’s price dynamics continue to be affected by external shocks that are more permanent than expected, associated with higher prices for oil and other important raw materials for local production, as well as the increase in the global cost of transporting containers and other disruptions in supply chains. 
• Average consumer prices rose to 7.8% in 2021 from 3.8% in 2020. Therefore, in an attempt to curtail the impact of inflationary pressures on its economy, DomRep has taken a stance similar to that being employed by other regional and international central banks by increasing their policy rate. In a bid to fight the historic surge in inflation, further increases in the policy rates is expected.

(Source: Dominican Republic Central Bank)