- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 5.25%
The Central Bank of the Dominican Republic (BCRD) held its monetary policy rate (TPM) at 5.25% in its February 2026 decision, citing higher global uncertainty linked to changes in United States trade policy, greater geopolitical tensions and food-price pressures from supply shocks, while also noting that monetary transmission has been operating efficiently and has supported more favorable financial conditions through lower bank interest rates. After cumulative 50 bp cuts in September and October 2025 from 5.75% to 5.25%, the BCRD kept the one-day repo rate at 5.75% and the overnight deposit rate at 4.50%. Annual inflation stood at 4.98% in January, around the upper limit of the 4.0% ± 1.0% target range, while core inflation was 4.89%; the central bank expects monthly inflation to moderate as supply conditions normalize and sees annual inflation converging to the center of the target range by end-2026. Economic activity expanded 3.5% year on year in January, with private credit in local currency growing above 8% in February. On the external side, the current account deficit narrowed to 1.2% of GDP in 2025 and international reserves were around USD16.1 billion in February, while the exchange rate showed relative stability with cumulative appreciation of about 4%. The BCRD also pointed to resilient United States growth, a gradual euro area recovery, and higher oil and gold prices amid geopolitical tensions, and said it will continue monitoring the economy and evaluating room to adopt timely measures consistent with price 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.