Dominican Republic: Central Bank decreases rates in December
Monetary policy easing continues: At its meeting on 31 December, the Central Bank of the Dominican Republic (BCRD) decided to reduce its monetary policy interest rate by 25 basis points to 5.75%. This brought the cumulative rate reduction since May 2023 to 275 basis points.
Global rate moves, within-target inflation and robust GDP growth motivate cut: In its decision, the BCRD took into account recent interest rate cuts by major central banks globally, within-target inflation in November and a recent moderation of private credit. The Bank also projects that inflation will remain within the 3.0–5.0% target range in 2025. Additionally, the decision was supported by the Bank’s assessment that the Dominican economy will continue growing robustly at about 5% in 2024, remaining one of the top performers in Central America and the Caribbean.
Further monetary policy loosening expected: The Bank stated that it would continue to adopt measures to “preserve macroeconomic stability and contribute to keeping inflation within the target range”. All our panelists expect further rate cuts this year; the Consensus is for about 100 basis points of further easing by the end of 2025. Upside risks to interest rates include a weaker-than-expected peso, higher-than-expected terminal interest rates in the U.S. and unexpected commodity price spikes.
The Bank will reconvene at the end of January.