Dominican Republic

Dominican Republic Monetary Policy April 2023

Dominican Republic: Central Bank stays put for sixth consecutive meeting in April

At its meeting on 28 April, the Central Bank of the Dominican Republic (BCRD) voted to once again to keep the policy rate at 8.50%, where it has been since October 2022. The move marked the sixth consecutive hold and followed a cumulative 550 basis point increase since November 2021.

The BCRD noted that previous rate increases, government subsidies and moderating domestic demand had brought inflation down. Both headline and core inflation trended downwards through March from their peaks in April and May 2022, respectively. Additionally, the Bank forecast that, with the policy rate at its current level, inflation would return to its 3.0–5.0% target band “in the coming months”; at its March meeting, the Bank projected this to happen around mid-2023. Regarding activity, the BCRD noted the domestic economy was cooling, as expected, and that uncertainty was high, further supporting the decision to hold fire.

As in previous communiqués, the Bank did not provide any hints on future policy moves. If inflation continues its gradual downward trend as the Bank expects, it is likely that the tightening cycle will end this year: Most of our panelists expect the Bank to cut the policy rate before end-2023, while the remainder expect the rate to end the year at its current level.

The BCRD is expected to hold its next policy meeting at the end of May.

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