- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 5.25%
The Central Bank of the Dominican Republic (BCRD) held its policy rate at 5.25% in August, citing robust domestic activity and inflation that is expected to converge to target despite oil-related pressures from the Middle East conflict. Over the past year, the BCRD cut the rate by 25 basis points in both September and October 2025, from 5.75% to 5.25%, and has held it since. The one-day repo facility 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 eased to 5.47% in July and is forecast to return to the 4.0% ± 1.0% target range in the fourth quarter, with expectations anchored, while economic growth is projected at around 4.5% in 2026 and private local-currency credit rose about 8% year on year. The Dominican peso had appreciated by more than 7% by end-August, and international reserves exceeded USD 15 billion, equivalent to about five months of imports. Globally, the prolonged Middle East conflict has kept oil and refined-fuel prices elevated and sustained inflationary uncertainty. The BCRD said it will continue monitoring international conditions and their domestic impact while maintaining 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.