Dominican Republic: Central Bank leaves rates unchanged in July
Rates remain unchanged for the seventh consecutive time: At its meeting on 31 July, the Central Bank of the Dominican Republic (BCRD) decided to maintain its policy rate at 5.75%, unchanged for the seventh consecutive month since January 2025.
Balancing opposing pressures drives decision: The BCRD deemed an interest rate hike unnecessary, citing a favorable inflation outlook: Inflation has remained within the BCRD’s 3.0–5.0% target range since April 2023 through June, and the Bank projects price pressures to stay within target through the end of this year and into 2026. Nonetheless, a rate cut was still off the table, as the latest U.S. trade agreements have helped ease economic uncertainty.
Looser monetary conditions expected by December: Our Consensus is for the BCRD to reduce the policy rate by roughly 50 basis points by the end of 2025. Most panelists expect reductions within the 25–75 basis points range, while one sees the BCRD maintaining rates unchanged. Upside risks include the possibility of the U.S. Federal Reserve delaying its rate cuts for longer, as the BCRD aims to preserve a stable interest rate spread with the Fed. On the other hand, downside risks to the policy rate stem from subdued private spending due to potentially lower remittances and lower tourist arrivals given a weaker-than-expected U.S. economy.
The Bank’s next meeting is scheduled for 28 August.
Panelist insight: EIU analysts said:
“We expect that the BCRD will restart its monetary-easing cycle in the third quarter, cutting the policy rate from 5.75% currently to a terminal rate of 5% by year-end. The BCRD will seek to keep interest-rate differentials with the US monetary policy rate stable. There is a moderate risk that the Dominican policy rate will be held at the current level for longer.”