- Decision
- Lower
- Rate change
- 25 bps
- monetary policy rate
- 5.25%
The Central Bank of the Dominican Republic (BCRD) lowered its policy rate by 25 bp to 5.25 % at the October 2025 meeting, cut the one-day repo rate to 5.75 % and left the overnight deposit rate at 4.50 %, citing continued easing of global financial conditions and a domestic inflation outlook that remains within the 4 % ± 1 pp target band. After keeping the rate at 5.75 % through August, the BCRD has now reduced the policy rate by a cumulative 50 bp with 25 bp cuts in September and October. The short-term interbank rate has fallen to 6.50 %, while the central bank is sustaining an RD$81 bn liquidity-provision programme of which RD$68 bn has been disbursed. Headline inflation eased to 3.76 % in September and core inflation to 4.35 %, with expectations anchored; economic activity grew 2.2 % year-to-September amid softness in construction and manufacturing, and the authorities project GDP growth of about 2.5 % in 2025 before recovering to 4–5 % in 2026. Private-sector credit is expanding 8.5 % y/y and is forecast to accelerate to 10–12 % by year-end. International reserves stand near USD 14.6 bn (11.4 % of GDP, over five months of imports) alongside a relatively stable exchange rate and a projected current-account deficit of 2.5 % of GDP covered by FDI of about USD 4.8 bn. Globally, moderating uncertainties, lower external rates, stable oil at USD 61/bbl and record-high gold prices around USD 4,000/oz underpin the easing backdrop, while the US Federal Reserve has cut rates by 25 bp in both September and October amid softer labour markets. The central bank reiterated it will keep monitoring domestic and international conditions and stands ready to adopt further measures to support activity while maintaining 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.