Dominican Republic: Central Bank of the Dominican Republic maintains rates in April
At its meeting on 30 April, the Central Bank of the Dominican Republic (BCRD) decided to keep its monetary policy interest rate (TPM) unchanged at 7.00%. The decision extended the pause on BCRD’s monetary policy loosening cycle, which began in May 2023.
The decision to maintain the interest rate was influenced by domestic factors, notably inflation, which remained within the target range of 3.0–5.0% in March. The Central Bank also considered the gradual recovery of the Dominican economy and the dynamism of private credit as a result of ongoing monetary and fiscal policy.
The Bank did not provide specific forward guidance on what the BCRD will do with interest rates in the future. However, the BCRD stated it will continue to monitor macroeconomic developments with the aim of adopting timely measures to preserve macroeconomic stability and keep inflation within the target range. Our panelists expect 25–225 basis points of rate cuts by the end of 2024, in line with the U.S. Fed’s pivot and the Bank’s aim to stimulate domestic growth. The Bank is expected to convene next at the end of May.
EIU analysts commented on the outlook:
“We believe that the BCRD will restart monetary easing in the third quarter, taking the policy rate to a terminal rate of 5.5% by end-2024. 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.”