Dominican Republic Interest Rate

Central Bank leaves rates unchanged in June

Bank extends its pause again: At its meeting on 30 June, the Central Bank of the Dominican Republic (BCRD) decided to maintain its monetary policy interest rate at 5.25% for the eighth 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 June’s hold: Faster GDP growth in Q1 than in 2025 dissuaded the Bank from a cut, while anchored inflation expectations and recent reductions in crude oil prices following the U.S.-Iran truce tilted the scales against a hike. The BCRD likely also took into account the U.S. Fed’s hold in June in opting for a pause, as it aims to keep a steady interest rate differential to prevent sharp fluctuations in the Dominican peso’s exchange rate against the USD.

BCRD likely to cut rates ahead: Absent explicit forward guidance by the BCRD, most of our panelists see rate cuts by the end of 2026 amid within-target inflation. That said, a notable number of analysts see rates at or above current levels through December, likely reflecting the trajectory of the Fed’s decisions and faster GDP growth. Potential renewal of the U.S.-Iran war and severe El Niño weather conditions pushing inflation and inflation expectations significantly above target pose an upside risk to the policy rate.

Panelist insight: EIU analysts said: “We forecast that inflation will ease back to within the BCRD's target range in the fourth quarter of 2026, allowing for a final cut of 25 basis points to reach a terminal rate of 5% by end-2026. There is a high risk that monetary officials maintain the policy rate at 5.25% for longer, especially if the conflict in the Middle East re-escalates, lifting inflation (particularly for food and energy) by more than we expect.”

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