Dominican Republic

Dominican Republic Monetary Policy January 2024

Dominican Republic: Central Bank extends pause in January

On 31 January, the Central Bank of the Dominican Republic (BCRD) kept the policy rate at 7.00% for the second consecutive meeting. The decision extended the pause on the BCRD’s monetary policy loosening cycle.

January’s hold was driven by expectations that global interest rates would remain elevated for longer than previously anticipated. The BCRD also took into account rising commodity prices and transport costs on the back of extreme weather events fueled by climate change and geopolitical conflict. Nevertheless, the Bank acknowledged that the domestic economy was recovering and that inflation would remain within the 3.0–5.0% target range in 2024.

The BCRD did not provide concrete forward guidance in its January communiqué. That said, the Bank reiterated that it stood ready to take any necessary action to preserve macroeconomic stability and keep inflation within target. Our panelists expect between 50–225 basis points of additional rate cuts by end-2024.

The BCRD is expected to convene again at the end of February.

Analysts at the EIU commented on the outlook:

“We expect the BCRD to pause its easing cycle in March, but we have pencilled in another round of cuts in the third quarter of 2024 […]. This trajectory reflects our assumption that the BCRD will want to maintain an interest-rate differential with the US; the start of monetary easing in the U.S. in the second quarter of 2024 will support further rate cuts by the BCRD.”

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