The Central Bank of the Dominican Republic (BCRD) maintained its monetary policy rate at 5.25 percent, saying inflation is forecast to remain within its target range over the 24-month policy horizon while the economy was recovering after tourism and agriculture took a hit from the hurricanes of Irma and Maria.
The BCRD said preliminary data for October showed a recovery in economic activity, helped by the stimulating impact on domestic demand from an easing of monetary policy in July.
On July 31 the central bank cut its rate by 50 basis points and lowered the legal reserve ratio by 2.2 percentage points, which helped boost credit growth in the Dominican peso.
Since the bank's easing measure, private credit issued in peso has grown around 11 percent year-on-year, in line with the rate of growth in the M1 measure of money supply, or currency in circulation, the central bank said.
Hurricane Maria, which caused major damage to Puerto Rico and other parts of the Caribbean, in late September also caused damage to parts of the Dominican Republic.
The World Bank has approved a US$150 million loan to the Dominican Republic to help deal with natural disasters and the bank has said it expects this to support economic activity in the fourth quarter of this year.
The economy of the Dominican Republic grew by an annual rate of 2.7 percent in the second quarter of this year, down from 5.3 percent in the first quarter, while inflation eased to 3.48 percent in October from 3.8 percent in September.
The BCRD has projected that inflation by the end of this year will be around the lower limit of its target of 4.0 percent, plus/minus 1 percentage point.
www.CentralBankNews.info
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