- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 5.25%
The Central Bank of the Dominican Republic (BCRD) left its monetary policy rate unchanged at 5.25% in June 2026, after holding at 5.75% through August 2025 and cutting 25 basis points in both September and October, citing the Dominican economy’s gradual recovery and inflation pressures tied to a negative supply shock from higher international oil prices, while stressing that medium-term inflation expectations remain anchored to its 4.0% ± 1.0% target. The 1-day repo facility remains at 5.75% and the overnight deposit rate at 4.50%, and the central bank said it is actively managing system liquidity to support stable bank interest rates. Headline inflation rose to 5.35% in May on fuel-price adjustments linked to oil costs, while core inflation was 4.86%, and the monthly economic activity indicator (IMAE) grew 4.7% year on year in May as private credit in local currency expanded around 9%. External inflows helped keep the exchange rate relatively stable, with the Dominican peso showing a cumulative appreciation of about 5% by end-June, while international reserves stood at roughly USD15.8 billion, equivalent to about 6 months of imports. The BCRD said resilient US activity, weaker euro area growth and above-target inflation in several economies continued to shape the backdrop, even as West Texas Intermediate (WTI) crude fell sharply from around USD90 at end-May to around USD70 after a Middle East agreement. The central bank expects inflation to remain above the target range in the coming months, begin to ease in the second half of the year and return to the target range in the fourth quarter, and said it will keep monitoring international conditions and adopt measures as needed.
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.