Santo Domingo.- The Monetary Board’s decision to lower the overnight rate -which banks use to borrow and lend from one another- 75 base points announced by the Central Bank Thursday is hailed as reasonable and sends a positive signal on the economy, though some sectors also eye relaxing the rules for farmers, to make access to credit easier.
National Employers Union (UNE) president Angelo Viro agrees. In his view the lower rate would reactivate the economy, as long as there’s no inflation, as the Monetary Authority affirms.
He said if the studies show that inflation has fallen, then it makes sense to reduce the interest rate, stressing the importance of maintaining macroeconomic stability. He said if the exchange rate brakes or falls a bit, "then we feel that the measure is correct."
Central Banker Hector Valdez Albizu said the Monetary Board’s decision narrows the corridor of rates and contributes to spur the economy.
The overnight rate, which influences deposits, fell from 6.75% to 6% and the Lombard dropped from 9% to 8%.
Dominican Agribusiness Board (JAD) director Osmar Benitez said though the reduction is good news, it’s still not enough because credit can’t be accessed on the banks’ standard requirements.
“Because of agriculture’s very nature,” he cited farm loans as having C and D categories, or high risk. "That's why we’ve stated the need for lower interest rates. It’s best to have an amendment to relax the rules to allow the farmer to benefit from this drop, so they can access formal credit and put up their land as collateral."