- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 5.75%
The Central Bank of the Dominican Republic (BCRD) left its policy rate unchanged at 5.75% in its February 2025 meeting, holding the overnight deposit rate at 4.50% and the one-day repo facility at 6.25%, citing heightened global uncertainty, the prospect of prolonged high external rates, and continued on-target domestic inflation. After cutting the rate by a cumulative 275 bp since May 2023, the BCRD is now pausing while keeping in place liquidity-support measures, including 28-day repo operations, a RD$35.4 bn reserve-requirement release, a RD$68 bn rapid-liquidity line extension and RD$140 bn in maturing Central Bank securities. Year-on-year headline inflation eased to 3.32 % in January and core inflation stood at 4.03 %, both within the 4 % ± 1 pp target band, and forecasts point to target-consistent readings throughout 2025; real GDP grew 5.0 % in 2024 and is projected to expand about 4.5 % this year, supported by 9 % growth in peso-denominated private credit and monetary aggregates broadly matching nominal GDP. Robust tourism receipts, exports, remittances and FDI kept the peso broadly stable and international reserves near USD 14.8 bn (around 11 % of GDP, five months of imports). The decision also reflects a global backdrop of resilient US growth with January inflation at 3 %, a 7 % appreciation of the USD since September, moderating oil prices near USD 70/bbl and elevated geopolitical risks. The central bank pledged to keep monitoring conditions and to act as needed to preserve macroeconomic stability and maintain inflation within target.
Rate evolution
After holding the policy rate in May 2025, the Central Bank of the Dominican Republic kept it unchanged through August before easing in September and October, lowering it by 50 basis points to 5.25%, and then pausing in December. The pauses reflected persistent global uncertainty, restrictive external financial conditions, elevated United States rates, geopolitical tensions and oil-price volatility, even as headline inflation was 3.71% and core inflation 4.13% in April 2025 and forecasts kept both measures within the 4.0% ± 1.0% target range through 2026. As some external uncertainty eased and conditions became less restrictive, the Central Bank of the Dominican Republic turned to easing to support domestic demand amid weaker activity, especially in construction and manufacturing, while continuing to manage liquidity actively and reinforcing transmission through DOP 81 billion of liquidity provision and macroprudential measures.
The policy rate was then kept at 5.25% in January and February 2026 as inflation rose but stayed within target, with the Central Bank of the Dominican Republic judging the pressures to reflect mainly food supply shocks linked to external factors and climate events. It maintained the policy rate at 5.25% from March through August, initially citing the Middle East conflict, oil-related supply pressures, recovering activity and inflation expectations anchored to target, and later pointing to stronger domestic activity and persistent global uncertainty from the conflict and higher international oil prices. Annual inflation rose from 4.63% in March to 5.67% in June before moderating to 5.47% in July, while core inflation stood at 4.96%, with forecasts showing inflation returning to the 4.0% ± 1.0% target range in the fourth quarter as the Central Bank of the Dominican Republic managed liquidity to support stable bank rates, local-currency private credit grew around 8% year on year and the monthly economic activity indicator expanded 4.6% in July.