The Central Bank of the Dominican Republic (BCRD) has lowered its monetary policy rate (MPR) by 25 basis points (bps), dropping the benchmark from 5.50% to 5.25% annually following its October 2025 monetary policy meeting.
The cut comes to stimulate the economy that is now anticipated to close 2025 with a growth of approximately 2.5%, with a projected return to its potential pace of 4.0% to 5.0% in 2026, supported by coordinated monetary and fiscal policies.
The move, aimed at stimulating domestic demand, comes as the Central Bank projects local inflation will remain anchored within its target range of 4.0% ± 1.0% and global financial conditions continue to ease. The permanent liquidity expansion facility (1-day Repos) rate was also reduced from 6.00% to 5.75%, while the overnight remunerated deposit rate was kept unchanged at 4.50%.
The Central Bank explains the decision to cut the MPR reflects an improving, albeit complex, international environment:
• United States: The Federal Reserve (Fed) has cut its federal funds rate by 25 bps in both September and October as the labor market weakens, even with September inflation at 3.0%, above the Fed’s 2.0% target. The IMF projects modest US economic expansion of 2.0% in 2025.
• Eurozone: Economic activity is projected to grow by 1.2% in 2025, according to the IMF, grappling with geopolitical conflict and trade uncertainty. Year-on-year inflation settled at 2.2% in September, near the European Central Bank’s (ECB) target. The ECB held its reference rate steady in October after an accumulated 100 bps reduction earlier this year.
• Latin America: Several regional central banks have lowered their policy rates to support internal demand as external rates decline and uncertainty factors diminish. Average economic expansion in the region is projected at 2.4% for 2025.
The BCRD has cumulatively lowered the MPR by 50 bps since September to make monetary conditions more favorable. This measure is complemented by the ongoing RD$81 billion liquidity provision program, of which RD$68 billion has been disbursed, leading to:
• Significant interest rate reduction: The short-term interbank rate has dropped dramatically from 14.27% to 6.50% in October. The average weighted passive rate for multiple banking fell from 10.34% to 6.40%, and the average weighted active rate declined from 16.09% to 13.98%.
• Credit expansion: Private credit in local currency is projected to accelerate its year-on-year growth to 10% – 12% by year-end, up from around 8.5% in October.
Meanwhile, the Central Bank says that inflation continues under control, staying within the target range since mid-2023, registering 3.76% in September 2025 (core inflation at 4.35%). However, economic activity, measured by the Monthly Economic Activity Indicator (IMAE), showed a cumulative growth of 2.2% from January to September 2025, with key sectors like construction and manufacturing experiencing a slowdown that the Central Bank attributes to global uncertainty and tighter financial conditions.
On the commodities front, the Central Bank also reported on the cost of crude oil imports and the rising price for gold exports. West Texas Intermediate (WTI) crude oil held steady at around US$61 per barrel in October due to lower global demand and increased OPEC+ production. In contrast, gold prices surged to historic highs of approximately US$4,000 per troy ounce, reinforcing its role as a safe-haven asset in a volatile global landscape.
The external sector remains robust, with the BCRD expecting approximately US$46 billion in foreign exchange generation in 2025, driven by tourism (US$11.2 billion), remittances (US$11.7 billion), and total exports (US$14.9 billion). The current account deficit, projected at a manageable 2.5% of GDP, is expected to be comfortably covered by over US$4.8 billion in Foreign Direct Investment. International reserves stand strong at around US$14.6 billion, exceeding IMF-recommended metrics.
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Central Bank
El Caribe
Listin Diario
Listin Diario
3 November 2025