Dominican Rep. holds rate, inflation moves toward target

    The Central Bank of the Dominican Republic (CBDR) kept its policy rate steady at 5.0 percent, saying inflation is expected to gradually converge towards the center of its target range in the policy horizon although it still remains below the lower limit.
    The CBDR also said economic activity continues to grow above the country's potential, with preliminary data showing Gross Domestic Product growth of 7.0 percent in 2015, improving external accounts and a current account deficit that should remain around 2 percent of GDP in 2016, down from 3.1 percent in 2014.
   Consumer price inflation rose to 2.34 percent in December from 1.54 percent in November, still below the central bank's target range of 3-5 percent, with a midpoint target of 4.0 percent.
    The Dominican Republic's GDP expanded by an annual 7.1 percent in the third quarter of last year, up from 6.4 percent in the second quarter and 6.6 percent in the first quarter.
    The central bank said private loans in national currency were estimated to have risen by close to 12 percent last year.
    The current account of the Dominican Republic is improving in light of low oil prices, a good performance of tourism, remittances and exports.
    Good external accounts and fiscal policy aimed at consolidation and sustainable finances has facilitated the build-up of reserves along with leading to relative stability in the currency.
    The Dominican peso has been slowly but steadily depreciating against the U.S. dollar since 2007, with the trend continuing this year.
   The peso was trading at 45.7 to the dollar today, slightly below 45.5 at the start of the year and 44.3 at the start of 2015.

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