Dominican Republic: Central Bank lowers interest rates in September
BCRD continues easing cycle: At its meeting on 30 September, the Central Bank of the Dominican Republic (BCRD) decided to reduce its policy rate by 25 basis points to 6.50%. This brought overall rate cuts to 200 basis points since the Bank started loosening its monetary policy in May 2023.
Global and domestic factors behind latest cut: In its decision, the BCRD took into account lower commodity prices and recent rate cuts by the major central banks of advanced economies; moreover, it noted that the Dominican economy has performed strongly—with private-sector credit growth robust—and that inflation has remained within its 3.0–5.0% target corridor so far this year.
Cooling growth and soft inflation to bring forth further rate reductions: Looking ahead, the BCRD stated that it will continue to monitor the evolution of the economy, adopting the necessary measures to secure macroeconomic stability and within-target inflation. Accordingly, as our Consensus is for GDP growth to cool in H2 2024 and for inflation to remain within target, our panelists foresee between 25–150 basis points of additional rate cuts before year-end and further monetary policy easing next year. Stronger-than-expected rises in inflation and commodity prices pose upside risks.