The Central Bank announced lower overnight interest rates from 9.5% to 8.5% annually, or 1 percentage point, and the Lombarda interest rate from 16% to 14% annually, or 2 percentage points, which signals an eased monetary policy to continue in February, as the monetary authorities recently announced.
“The decisions with respect to changes in interest rates are conditional to the behavior of the main causes of inflation, which closed in December 2008 at 4.52%, below the goal established in the 2008 Monetary Program,” the Central Bank said on its Web site.
Inflation of only 4.52%, possibly Latin America’s lowest, means Dominicans will have received positive a real return from their savings in 2008.
“Interest rates reduction is consistent with the current behavior of oil prices and the internal demand, jointly with a position of greater fiscal prudence, reflected in the recently approved 2009 Income and Budget Law," the Central Bank said.
It adds that the Overnight rate is the one that represents the yield for the financial institutions that deposit their surplus in the Central Bank, reflecting the cost of money for the monetary institution, whereas the Lombarda rate is the maximum interest rate on short term loans to the financial institutions.
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