Central Bank leaves rates unchanged in February

February marks fourth consecutive hold: At its meeting on 25 February, the Central Bank of the Dominican Republic (BCRD) decided to maintain its monetary policy interest rate at 5.25%. The decision marked the fourth consecutive hold and kept the policy rate 325 basis points below its past-decade peak, which it reached in late-2022.

BCRD expects inflation to ease: The BCRD held fire once again due to the prolonged impact of Hurricane Melissa on food and services prices, which kept inflation at the upper bound of the Bank’s 3.0–5.0% target range in January. That said, the BCRD decided against a hike, as it expects weather-related price shocks to dissipate in the coming quarters and headline inflation to converge toward mid-target by the end of 2026. Meanwhile, the Bank did not cut rates as economic activity grew at a robust pace in January; the BCRD maintained its forecast for GDP growth of 4.0% in 2026.

Further rate cuts to echo U.S. Fed moves: By the end of 2026, most of our panelists expect 25–75 basis points of rate cuts, in line with within-target inflation and monetary policy easing by the U.S. Fed. This should bring the policy rate to a five-year low. That said, a minority continue to expect the Bank to keep the policy rate at its current level, likely due to the lingering impact of Hurricane Melissa and geopolitical tensions in the Middle East on price pressures. The BCRD should reconvene at the end of March.

Panelist insight: Oxford Economics’ Mauricio Monge said: “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.” EIU analysts commented: “We forecast that [the BCRD] will make a final cut of 25 basis points in the second half of 2026 to reach a terminal rate of 5%. There is a moderate risk that the BCRD will deliver its final cut earlier in 2026, if inflation and expectations converge more quickly than we currently expect. In the medium term there is a risk that policymakers would have to respond to local inflation picking up by more than we expect, for example in the event of a re-escalation of the US-China trade war (lifting prices in the US), which would pass through to the Dominican Republic via higher import prices, as the US is the country's main source of imported goods.”

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 11 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.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Dominican interest rate projections.

Want to get access to the full dataset of Dominican interest rate forecasts? Send an email to info@focus-economics.com.