Central Bank leaves rates unchanged in April

Rate remains at November 2025 levels: At its meeting on 30 April, the Central Bank of the Dominican Republic (BCRD) decided to maintain its policy interest rate at 5.25%, the level it has been at since November 2025. The hold was the sixth consecutive and kept the policy rate 325 basis points below its past-decade peak, which was reached in late 2022. Nevertheless, interest rates remain among the highest in Central America and the Caribbean and notably above the U.S. Fed policy rate.

Tame inflation and healthier GDP growth motivate hold: The BCRD held rates instead of cutting as commodity prices rose amid the Middle East conflict and GDP growth accelerated in Q1. Meanwhile, a hike was also unnecessary due to within-target inflation through March, anchored inflation expectations and easing food price pressures as Hurricane Melissa's impact fades.

Panelists continue to expect rate cuts in 2026: 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, some panelists forecast that the BCRD will stand pat or hike the policy rate above current levels by December, likely due to a longer-than-expected impact of Hurricane Melissa and the effect on commodity prices of the Iran war. Higher-for-longer global energy prices and potential droughts due to the El Niño weather event later this year pose upside risks to inflation and the policy rate. The BCRD should reconvene at the end of May.

Panelist insight: 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%, even amid elevated oil prices, assuming that the shock will be temporary. There is a high risk that monetary officials maintain the policy rate at 5.25% for longer, especially if the conflict in the Middle East escalates, lifting inflation (particularly for food and energy) by more than we expect.”

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