Dominican Republic

Dominican Republic Monetary Policy September 2023

Dominican Republic: Central Bank pauses loosening cycle in September

At its meeting on 29 September, the Central Bank of the Dominican Republic (BCRD) paused its loosening cycle, maintaining the policy rate at 7.50%. The move followed August’s 25 basis point cut, which brought the cumulative slashes to 100 basis points since May.

The decision to hold was driven by the success of prior rate cuts in bringing down price pressures; headline inflation remained within the BCRD’s 3.0–5.0% target band in August, and core inflation eased further. Moreover, the Bank expects inflation to stay within its target range for the rest of 2023 and throughout 2024. Regarding activity, growth accelerated in August: The economy expanded by a cumulative 1.5% year on year in the first eight months of the year (January–July: +1.4% yoy).

As in previous monetary policy communiqués, September’s was void of explicit forward guidance. The BCRD only reiterated that it would continue to take necessary action to keep inflation within its target. Most of our panelists have penciled in between 50–100 basis points worth of additional cuts before the end of the year, while the remainder see the rate ending 2023 at its current level.

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

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