- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 5.25%
The Central Bank of the Dominican Republic left its monetary policy rate at 5.25% in its January 2026 decision, citing higher global uncertainty and recent inflation pressures linked mainly to food supply shocks, while saying monetary transmission has been operating efficiently and supporting favorable financial conditions; over the past year, it held the rate at 5.75% through August 2025, cut by 25 basis points in September and again in October to 5.25%, and then held it through December. The 1-day repo rate remains at 5.75% and the overnight deposit rate at 4.50%. Annual inflation rose to 4.95% in December 2025, still within the 4.0% ± 1.0% target range, and the central bank expects headline and core inflation to be back within target by end-2026 as supply conditions normalize; economic activity grew 2.3% year on year in December, taking 2025 growth to 2.1%, with a gradual recovery to around 4.0% projected for 2026, while private-sector credit in local currency was expanding by about 8% in January. On the external side, the current account deficit is estimated at about 2.4% of GDP in 2025 and fully financed by projected foreign direct investment of USD 4.9 billion, while reserves stood at about USD 14.7 billion at end-2025. The central bank said the global backdrop remains uncertain, with resilient US growth, euro area activity constrained by geopolitical conflict and trade uncertainty, and higher geopolitical tensions pushing WTI oil to around USD 65 while gold remained at record highs. It said it will continue monitoring the economy and evaluating room to adopt timely measures to support activity while keeping 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.