Dominican Republic Interest Rate

Central Bank leaves rates unchanged in July

Bank extends its pause again: At its meeting on 31 July, the Central Bank of the Dominican Republic (BCRD) decided to maintain its monetary policy interest rate at 5.25% for the ninth consecutive meeting. The policy rate remains among the highest in Central America and the Caribbean.

Fed hold, easing geopolitical tensions and a strong economy behind decision: Accelerating GDP growth in Q2 and renewed conflict in the Middle East dissuaded the Bank from a cut, while anchored inflation expectations and the Bank’s forecasts of inflation returning to target towards end-2026 tilted the scales against a hike. In opting to keep rates unchanged, the BCRD likely also took into account the U.S. Fed’s hold in July, as it aims to keep a steady interest rate differential to prevent sharp fluctuations in the Dominican peso’s exchange rate against the USD.

Fewer panelists now see room for cuts in 2026: The BCRD did not provide explicit forward guidance by the BCRD. Fewer panelists see rate cuts by the end of 2026 compared to earlier months. A majority now expects rates to end the year at or above current levels, likely reflecting faster GDP growth, potential hikes by the U.S. Fed and the renewal of the U.S.-Iran war. Upside risks to the policy rate stem from potentially severe El Niño weather conditions, which could push inflation and inflation expectations significantly above target.

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