Dominican Republic

Dominican Republic Monetary Policy February 2024

Dominican Republic: Central Bank stands pat in February

On 29 February, the Central Bank of the Dominican Republic (BCRD) kept the policy rate at 7.00% for the third consecutive meeting. The decision extended the BCRD’s pause on monetary policy loosening.

February’s hold was driven by expectations that global interest rates would remain higher for longer. In addition, the BCRD remained wary of rising commodity prices and transport costs on the back of geopolitical conflict and extreme weather events fueled by climate change. 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, with January’s inflation rate easing to 3.3%.

The BCRD did not provide concrete forward guidance in its February 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 March.

Analysts at the EIU commented on the outlook:

“We believe that the BCRD will restart monetary easing in the third quarter […]. 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.”

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