The Central Bank of the Dominican Republic (BCRD) has announced a reduction in its monetary policy interest rate (MPR) by 25 basis points (bps), moving it from 5.75% to 5.50% annually.
This decision aims to introduce more flexible monetary conditions to help boost domestic demand given the changing external situations. The BCRD stated that while global uncertainty persists, the measure was taken because international financial conditions are becoming less restrictive.
Alongside the MPR cut, the rate for the permanent liquidity expansion facility (1-day Repos) has also been reduced from 6.25% to 6.00% annually. The rate on remunerated deposits (Overnight), however, will remain unchanged at 4.50% annually.
The Central Bank’s move is supported by a stable domestic inflation environment.
• Inflation has remained within the target range of 4.0%±1.0% since the first half of 2023.
• Year-on-year inflation was 3.71% in August 2025.
• Core inflation (excluding volatile items) stood at 4.32%, near the center of the target.
• The BCRD’s forecasts indicate both headline and core inflation will continue to stay within the target range through 2025 and 2026.
Economic activity, measured by the Monthly Economic Activity Indicator (IMAE), recorded a cumulative growth of 2.3% from January to August 2025, following a 1.5% year-on-year expansion in August. However, some key sectors like construction and manufacturing have shown a slowdown during the first eight months of the year.
To further support economic recovery, the Central Bank is implementing additional measures:
• Liquidity program: Approximately RD$62 billion has been disbursed to date from the RD$81 billion liquidity provision program approved by the Monetary Board in June, facilitating favorable credit channeling to productive sectors.
• Credit growth: Private credit in local currency saw a year-on-year growth exceeding 8.5% by the end of September and is projected to accelerate to between 10% and 12% year-on-year by the end of 2025.
• Bank rates: Banking interest rates have begun to decrease due to increased liquidity and the normalization of the monetary policy transmission mechanism.
• Fiscal coordination: Increased public investment, consistent with the reformed 2025 state budget, is expected. The coordination of monetary and fiscal policies is anticipated to contribute to a gradual recovery of the Dominican economy, with expansion potentially reaching between 4.0% and 5.0% in 2026.
The BCRD’s decision is in line with developments in major global economies and the broader Latin American region.
United States
• Growth is projected to remain moderate, with a 1.7% expansion in 2025 (Consensus Forecasts).
• Inflation reached 2.9% in August, above the Federal Reserve’s (Fed) 2.0% target.
• The US labor market is showing signs of weakening.
• The Fed reduced the federal funds rate by 25 bps in September and is expected to implement two additional cuts before the year’s end.
Eurozone
• Economic activity is expected to grow by 1.2% in 2025, impacted by geopolitical conflicts and trade uncertainty.
• Annual inflation was 2.0% in August 2025, meeting the European Central Bank’s (ECB) target.
• The ECB kept its reference rate unchanged in September after a cumulative 50 bps reduction in 2025, with market analysts expecting one more 25 bps cut this year.
Latin America
• Growth prospects remain moderate, with a projected regional expansion of 2.2% for 2025.
• As global uncertainty lessens and external interest rates fall, most central banks in the region have cut their policy rates to support domestic demand.
The Central Bank highlights the country’s economic resilience and the robus external sector. In its recent update on measures to withstand external impacts, the Central Bank highlights:
• The country is expected to generate approximately US$46.16 billion in foreign exchange in 2025, driven by strong performance in tourism, exports, remittances, and foreign direct investment (FDI).
• The current account deficit is projected at 2.5% of GDP for 2025, comfortably covered by an estimated US$4.8 billion in FDI.
• Exchange rate volatility has moderated, with a cumulative depreciation of the Dominican peso around 2% by the end of September.
• International reserves stand at about US$13.3 billion, surpassing recommended metrics.
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Central Bank
DR1 News
1 October 2025