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Santo Domingo.- Dominican Republic’s Central Bank on Thursday cut 50 base points in the Libor (London Interbank Overnight Rate) from 5.50% to 5% annually, a measure adopted yesterday in its monthly monetary policy meeting.
In a statement the Central Bank reports that inflation forecasts are still below the target, both for this year as well as 2013.
It said the inter-annual inflation rate fell to 1.64% in July with annual inflation at 3.16%, for which "the forecast models don’t foresee significant inflationary pressures on the monetary policy horizon for two years."
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Seems like the reporter from LaDeeDah ville is up early and on every case.
The screeching noise you hear are not the rusty brakes of the METRO but that of the Dominican Economy being weighed down by PLD PURPLE excessive DEBT!
Ricardolito, maybe you can explain what Libor has to do with this, since the peso is not a Libor currency..does the DR have a dual exchange rate? what is the peg? is it pegged? is it a crawling peg? what is the explanation for this article? dropping the interest rate is not a good strategy for attracting foreign investment, unless the foreign investors are not bringing their own financial capital, but are hoping to borrow from local financial institutions. the crowdout effect might not be pleasant... it might be good for the car dealers, but not for inflation. i wonder what the IMF will say....hmmm. i just hope that this will not cause an outrush of hot money, of which the banking system has so much.
From: United States
Please someone correct me if I'm wrong. When you go from 5% to 6% isn't that a one point increase? So from 5.50% to 5% isn't that a half a point decrease? not 50 points?
incorrect. there are 100 basis points in 1%. the article says base points, but the correct term is a basis point. 50 basis points equal one half of one percent.