- Decision
- Raise
- Rate change
- 25 bps
- monetary policy rate
- 5.5%
The Central Bank of the Dominican Republic (BCRD) raised its monetary policy rate by 25 basis points to 5.50% in September 2026 as a preventive measure to preserve anchored inflation expectations and avert second-round price effects from more persistent supply shocks, while economic activity remained robust. The rate had been cut by a cumulative 50 basis points in September-October 2025 and held at 5.25% through August 2026. The BCRD raised the one-day repo rate to 6.00% and the overnight deposit rate to 4.75%, and said it would actively manage financial-system liquidity at adequate levels. Headline inflation eased to 5.13% in August and is forecast to return during the fourth quarter to the 4.0% ± 1.0% target range, while medium-term expectations remained anchored at the target midpoint. Economic activity expanded 4.5% in the first eight months and is projected to grow at around that pace in 2026, while local-currency private credit grew about 7.5% year on year in August. The Dominican peso appreciated about 6% through September, and international reserves provided around five months of import cover. The global backdrop featured higher oil and refined-fuel prices linked to the Middle East conflict, disruptions to global freight transport, adverse weather and tighter international financial conditions. The BCRD said it would continue monitoring external developments and adopt measures needed to meet the inflation target and preserve 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% from January through August 2026, with the Central Bank of the Dominican Republic initially judging higher inflation to reflect mainly food supply shocks linked to external factors and climate events, then citing the Middle East conflict, oil-related supply pressures, recovering activity and anchored inflation expectations, 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 5.13% in August and core inflation eased to 4.76%, with forecasts showing inflation returning to the 4.0% ± 1.0% target range in the fourth quarter, the Central Bank continuing to manage liquidity actively, local-currency private credit growing around 7.5% year on year through August and economic activity expanding 4.5% in the first eight months. In September, the Central Bank of the Dominican Republic raised the policy rate by 25 basis points to 5.50% in a preventive move to keep inflation expectations anchored and prevent second-round price effects as supply shocks proved more persistent than expected and inflation risks increased due to higher oil and refined-product prices linked to the Middle East conflict, disruptions to global goods transport, adverse weather and more restrictive international financial conditions.