- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 5.75%
The Central Bank of the Dominican Republic (BCRD) held its monetary policy rate at 5.75% in May 2025, citing persistent global uncertainty, elevated interest rates in the United States and domestic inflation that has remained within the 4.0% ± 1.0% target range for the past two years; the rate has been unchanged at 5.75% since at least January 2025, following cumulative cuts of 125 basis points in the second half of 2024. The BCRD also left its one-day repo rate at 6.25% and its overnight deposit rate at 4.50%, while noting active liquidity management in early 2025 and macroprudential measures adopted by the Monetary Board to strengthen financial stability. Headline inflation stood at 3.71% in April 2025 and core inflation at 4.13%, with the central bank’s models indicating both headline and core inflation will remain within target in 2025 and 2026; economic activity expanded 2.5% year on year in January-April 2025, and the BCRD expects growth of around 3.5%-4.0% in 2025, while private credit in local currency was growing by about 8% year on year at end-May. On the external side, the peso had appreciated by about 3.3% in May 2025 and international reserves were above USD14.7 billion, equivalent to about five months of imports. The BCRD said the global backdrop was marked by weaker US and euro area growth prospects, trade tensions, geopolitical conflicts and higher inflation expectations in the US linked to tariff increases, and it reiterated that it will continue monitoring the economy and take timely measures to preserve macroeconomic stability and keep 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.