By CentralBankNews.info
The Central Bank of the Dominican Republic (BCRD) kept its monetary policy rate at 5.50 percent, saying inflation is projected to converge to the target range in the policy horizon.
BCRD has maintained its rate since raising it by 50 basis points in October last year in a preventative move reflecting inflation, the expected rate hike by the U.S. Federal Reserve, the trend toward higher oil prices and uncertainty in international financial markets.
Inflation rose to 1.7 percent in December from 0.88 percent in November while underlying inflation was 1.89 percent, the central bank said.
BCRD targets inflation of 4.0 percent, plus/minus 1 percentage point.
Economic activity in the Dominican Republic expanded by 6.6 percent in 2016, the highest in the region for the third year running, the central bank said, adding that credit of the total financial system to the private sector, both domestic and foreign currency, grew by 11.9 percent at the end of 2016.
In addition the current account deficit narrowed to 1.5 percent of Gross Domestic Product, the smallest in the last decade, helped by tourism, remittances and national exports.
Gross International Reserves ended at a historically high level of US$6.047.4 billion, the equivalent of 3.9 months of imports, helping stabilize the foreign exchange market.
The Dominican peso has been slowly and steadily depreciating since 2007 and was trading at 46.6 to the U.S. dollar today, down from 46.18 at the start of the year.
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