- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 5.25%
In its March 2026 decision, the Central Bank of the Dominican Republic held its monetary policy rate at 5.25% as it weighed the escalation of the conflict in the Middle East, higher global uncertainty and commodity prices against a gradual recovery in domestic activity and inflation expectations that remain anchored to target; after cutting by a cumulative 50 basis points in September and October 2025, the rate has been held at 5.25% since then. The 1-day repo rate remained at 5.75% and the overnight deposit rate at 4.50%. Annual inflation eased to 4.67% in February and core inflation stood at 4.76%, both within the 4.0% ± 1.0% target range, while the central bank forecasts inflation will stay affected by short-term supply shocks from higher oil prices but close 2026 within target; the monthly economic activity index grew 3.5% in January and 3.9% in February, 2026 growth is seen at 3.5%-4.0%, and private credit in local currency was expanding around 9% year on year. The Dominican peso had appreciated by nearly 4% by March 2026 and reserves were around USD16.0 billion, equal to 12% of GDP and about six months of imports. The central bank highlighted a roughly 50% rise in West Texas Intermediate crude in March to above USD100 a barrel, weaker euro zone prospects, and the Federal Reserve’s March decision to hold rates at 3.50%-3.75% as key external factors. The central bank said it will keep monitoring international conditions and take timely measures as needed to support achievement of the inflation 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.