Dominican Republic: Central Bank holds rates steady in March
The Central Bank of the Dominican Republic (BCRD) kept the policy rate at 7.00% for the fourth consecutive meeting on 27 March. The decision extended the BCRD’s pause on monetary policy loosening; the rate has not changed since the Bank reduced it by 25 basis points at its meeting in November last year, with a cumulative cut of 150 basis points between May and November.
The decision to keep the interest rate steady was primarily influenced by domestic factors, including inflation, which remained within the target range of 3.0–5.0% in February due to the impact of previous monetary and fiscal policy moves. The Central Bank also stood pat as it deemed domestic activity to be robust and private credit to be accelerating.
The BCRD did not provide concrete forward guidance in its March communiqué. However, the Bank reiterated that it would continue monitoring macroeconomic factors in order to take the actions necessary to preserve economic stability and keep inflation within target. Our panelists expect 50–225 basis points of additional rate cuts by end-2024.
The BCRD is expected to convene again at the end of April.
Analysts at the EIU commented on the outlook:
“We believe that the BCRD will restart monetary easing in the third quarter, taking the policy rate to a terminal rate of 5.5% by end-2024. This trajectory reflects our assumption that the BCRD will want to narrow the interest-rate differential with the US; the start of monetary easing in the US in the second quarter of 2024 will support further rate cuts by the BCRD.”