Dominican Republic

Dominican Republic Monetary Policy July 2023

Dominican Republic: Central Bank pauses loosening cycle at July meeting

At its meeting on 31 July, the Central Bank of the Dominican Republic (BCRD) paused its loosening cycle and stood pat, keeping the policy rate unchanged at 7.75%. The decision followed June’s 25 basis point cut.

The BCRD noted headline inflation had hovered around the mid-point of its 3.0–5.0% target range in recent months—it came in at 4.0% in June. Regarding inflation expectations, the BRCD forecast that inflation would remain within the target band in the remainder of 2023 and in 2024.

With regards to activity, the Bank assessed that a deterioration in the external environment—amid heightened global uncertainty—and the deceleration of domestic demand had led to a slowdown in economic growth; GDP expanded by a cumulative 1.2% year on year in January–June this year.

As in previous communiqués, the BCRD did not provide any hint on future policy moves. It reiterated, once again, that it would monitor macroeconomic developments in order to keep inflation within its target range.

All of our panelists see the rate ending 2023 below its current level; they have penciled in between 25–125 basis points of cuts for the remainder of the year.

The BCRD is expected to hold its next policy meeting before the end of August.

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