República Dominicana Actividad económica May 2023

República Dominicana: Central Bank delivers 50 basis point cut at May meeting

At its meeting on 31 May, the Central Bank of the Dominican Republic (BCRD) delivered a 50 basis point cut, lowering the policy rate to 8.00%. The move followed six consecutive holds.

The BCRD noted that a cumulative 550 basis point increase between November 2021 and October 2022, together with a range of government subsidies, had succeeded in bringing inflation down. Slowing domestic demand and lower commodity prices also contributed to reduced raw materials and transport prices, further cooling price pressures. While both headline and core inflation remained above the Central Bank’s 3.0–5.0% target range in April, the BCRD projected that headline inflation would fall back within the target band in May; at its April meeting, the Bank said that it did not expect this to happen before June. Given the sharper-than-expected deceleration of inflation, the BCRD opted to commence its normalization of monetary policy.

As in previous communiqués, the Bank did not provide any hints on future policy moves. The BCRD reaffirmed its commitment to preserving macroeconomic stability and maintaining the inflation rate within its target. All our panelists expect the Bank to cut the policy rate further before end-2023.

The BCRD is expected to hold its next policy meeting before the end of June.