Central Bank cuts rates in October

Monetary policy loosening continues: At its meeting on 31 October, the Central Bank of the Dominican Republic (BCRD) decided to reduce its policy rate by 25 basis points from 6.50% to 6.25%. This brought overall rate cuts to 225 basis points since the Bank started loosening its monetary policy in May 2023.

Falling commodity prices and interest rates abroad make room for cut: In making its decision, the BCRD took into account the recent decline in commodity prices as well as 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 reaching closer towards the BCRD’s target level—and that inflation has remained within its 3.0–5.0% target corridor so far this year, reaching 4.0% in September.

Further rate cuts on the horizon: Looking ahead, the BCRD stated that it will continue to monitor the evolution of the economy, adopting the measures needed to secure macroeconomic stability and within-target inflation. Our panelists see between 25–125 basis points of additional rate cuts before year-end and further monetary policy easing next year. Spikes in inflation and commodity prices plus unexpected depreciation in the Dominican peso pose upside risks.

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Dominican interest rate projections for the next ten years from a panel of 6 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Dominican interest rate.

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