Central Bank Reduces Monetary Policy Rate Again and Announces Liquidity Increase

DOMINICAN REPUBLIC - In Brief 29 Nov 2024 by Magdalena Lizardo
The Central Bank has once again reduced the monetary policy rate, lowering it by 25 basis points to 6% annually, effective December 2024. The permanent facility rate has been decreased to 6.50% annually, while the overnight deposit rate has been set at 4.5% annually. Additionally, this week the Central Bank announced an increase in liquidity for the financial system, amounting to DOP 240.3 billion. Part of this increase is due to the release of legal reserves (DOP 35.3 billion), which will be primarily allocated to loans for housing construction and acquisition. Another portion is earmarked for the redemption of Central Bank securities maturing in the last quarter of 2024 (DOP 140 billion), and for a one-year extension of the rapid liquidity facility (DOP 68 billion). According to the Central Bank, this monetary easing aims to accelerate the transmission mechanism of monetary policy and reduce interest rates on loans to productive sectors and households. The goal is to boost private credit growth and sustain the dynamism of domestic demand.

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