Dominican Republic: Central Bank leaves rates unchanged in December
Latest bank decision: In December, the Central Bank of the Dominican Republic (BCRD) decided to maintain its monetary policy interest rate at 5.25%. The decision was the second consecutive hold and kept the policy rate 325 basis points below its past-decade peak, which it reached in early 2023.
Bank remains on hold amid Hurricane Melissa: The BCRD refrained from a rate cut due to the impact of Hurricane Melissa on food prices, and it ruled out a rate hike, as inflation remained within its target range in November. The Bank expects climate-related price shocks to dissipate in early 2026.
Rate cuts to resume ahead: In 2026, most of our panelists expect 25–75 basis points of rate cuts. As such, the policy rate should end the year at a five-year low, as inflation should stay within target and the Central Bank will likely shift its focus to invigorating domestic demand.
The BCRD should reconvene in January.
Panelist insight: Oxford Economics’ Mauricio Monge commented on the outlook for inflation and monetary policy:
“Inflation has remained at the lower bound of the central bank’s (BCRD) target range of 4% (±1ppt) in 2025, and we expect it to edge closer to 4% in 2026. With inflation under control and expectations well anchored to the BCRD’s target, but with the economy facing headwinds from a weak external sector and sluggish investment, we forecast a monetary policy rate of 5% in 2026.”