- Decision
- Lower
- Rate change
- 25 bps
- monetary policy rate
- 5.5%
The Central Bank of the Dominican Republic (BCRD) cut its policy rate by 25 bp to 5.50 % and lowered the overnight repo rate to 6.00 %, while leaving the overnight deposit rate unchanged at 4.50 %, citing contained inflation within the 4 % ± 1 pp target and a need to foster domestic demand as global financial conditions ease. This marks the first move after holding 5.75 % since January and follows a cumulative 125 bp easing in the second half of 2024. The corridor is now set at 4.50 %–6.00 %, and RD$62 bn of a RD$81 bn liquidity-provision programme has already been deployed to support credit flows. Annual headline inflation was 3.71 % in August and core inflation 4.32 %, with BCRD forecasting both to remain within target through 2026, while economic activity grew 2.3 % y-t-d to August amid softness in construction and manufacturing. Private credit in DOP is expanding above 8.5 % y/y and is expected to reach 10 %–12 % by year-end. The peso has depreciated about 2 % year-to-date; international reserves stand near USD 13.3 bn (10.4 % of GDP, about five months of imports) and the 2025 current-account deficit is seen at 2.5 % of GDP, comfortably financed by FDI. Against a backdrop of moderating but still elevated US inflation, a 25 bp Fed funds cut in September and lower global oil prices (WTI around USD 63), the central bank pledged to keep monitoring conditions and signalled that policy space remains to further support economic recovery while safeguarding the inflation 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.