Dominican Republic: Central Bank of the Dominican Republic leaves rates unchanged in June
June sees sixth hold for the year: At its meeting on 30 June, the Central Bank of the Dominican Republic (BCRD) decided to maintain its policy rate at 5.75% for the sixth consecutive meeting since January.
Goldilocks inflation and solid GDP growth drive hold: The key domestic factors influencing the BCRD’s decision included the steadying of inflation within the target range of 3.0–5.0% over the last two years, with annual inflation at 3.8% in May and core inflation, which excludes the most volatile components of the consumer price basket, at 4.2% in the same month. Moreover, the economy’s robust performance so far this year, along with recent BCRD measures to boost liquidity and thereby stimulate private sector credit, made a rate cut unnecessary.
Panelists still see cuts on the horizon: The Central Bank did not provide specific forward guidance. Our panelists now expect the policy rate to end 2025 between 25–75 basis points below current levels, though one panelist expects rates to remain unchanged. A weaker-than-expected domestic economy poses a downside risk to the policy rate, while higher-for-longer U.S. interest rates are an upside risk.