The Central Bank of the Dominican Republic has decided to increase its monetary policy interest rate by 50 basis points effective today (February 7), going from 4.5 per cent to five per cent per year. 

In this way, the rate of the permanent liquidity expansion facility (one-day repos) increases from five per cent to 5.50 per cent per year and the interest-bearing deposit rate (overnight) from four per cent to 4.50 per cent per year. 

The monthly variation of the consumer price index (CPI) in December was 0.73 per cent, while the year-on-year inflation at the end of 2021 was 8.50 per cent.

On the other hand, year-on-year core inflation, which excludes the most volatile components of the basket, reached 6.87 per cent in December 2021, reflecting second-round effects on production associated with supply shocks. This decision is part of the monetary policy normalization plan being implemented by the Central Bank to moderate price shocks. It contributes to the convergence of inflation to the target range in a context of highly dynamic economic activity.

The annual inflation rate in the Dominican Republic accelerated to 8.5 per cent in December of 2021 from 8.2 per cent in the previous period, marking the highest in the past six months.

The costs accelerated for alcoholic beverages & tobacco (12.47 per cent vs 12.3 per cent), restaurants & hotels (9.88 per cent vs 9.4 per cent), food & non-alcoholic beverages (9.22 per cent vs 8.1 per cent), miscellaneous goods & services (6.81 per cent vs 6.5 per cent), furniture (6.62 per cent vs 6.2 per cent).

Meanwhile, the inflation eased for transport (16.24 per cent vs 17.2 per cent). On a monthly basis, consumer prices rose 0.73 per cent, after jumping 1.08 per cent in the previous month.