- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 5.25%
The Central Bank of the Dominican Republic (BCRD) held its monetary policy rate at 5.25% in July, citing robust domestic activity and oil-driven inflation pressures while forecasting inflation to return to its 4.0% ± 1.0% target range in the fourth quarter. The BCRD has kept the rate unchanged since cutting it by a cumulative 50 basis points in September and October 2025. The one-day repo rate remained at 5.75% and the overnight deposit rate at 4.50%, while the central bank continued actively managing financial-system liquidity to support stable lending rates. Annual inflation rose to 5.67% in June, while economic growth in 2026 was projected near the upper end of a 4.0%-4.5% range and local-currency private credit expanded by around 8%. Foreign-currency inflows supported an approximately 8% cumulative appreciation of the Dominican peso by end-July, while reserves provided about six months of import cover. Renewed Middle East conflict increased global uncertainty and lifted West Texas Intermediate crude to about USD 86 per barrel at end-July from USD 70 at end-June. The BCRD said it would continue monitoring international conditions and their potential economic impact, reaffirming its commitment to the inflation objective and macroeconomic stability.
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.