The Central Bank of the Dominican Republic raises its monetary policy rate to 5.50% per annum

The Central Bank of the Dominican Republic raised its monetary policy rate to 5.50% annually in September 2026. (EFE/Orlando Barría) The Central Bank of the Dominican Republic raised its monetary policy rate by 25 basis points in September 2026, from 5.25% to 5.50% annually. The institution also adjusted the rates of its permanent facilities: one-day repos moved to 6.00% annually and overnight remunerated deposits were set at 4.75% annually. The decision was presented as a preventive measure to preserve the anchoring of inflation expectations and reduce the possibility of supply shocks spreading to other prices. The institution considered that these pressures have proven more persistent than expected, in a scenario of greater international volatility. The BCRD noted that inflationary risks increased during September due to the rising cost of oil and its derivatives, associated with the evolution of the war conflict in the Middle East. The entity also included among the relevant factors the disruptions in global freight transport, adverse weather conditions, and a more restrictive international financial environment. The price of Texas intermediate oil, known as WTI, exceeded USD 100 per barrel in mid-September and then moderated to around USD 90 toward the end of the month. According to the central bank, refined products registered larger increases than those observed in crude oil, an element that can affect domestic transportation and production costs. Gold, meanwhile, moderated to around USD 4,200 per troy ounce amid rising yields on United States Treasury bonds. The rising cost of Texas intermediate oil and tensions in the Middle East increased inflationary risks. (Photo: Diario Libre) In the United States, Consensus Forecasts projects an expansion of 2.1% for 2026. Year-over-year inflation remained at 3.4%, above the 2.0% target, while job creation picked up in August. In that context, the Federal Reserve raised its benchmark rate by 25 basis points during September and indicated that it could make another increase before the end of the year. The Euro Zone's outlook was also considered in the analysis. Consensus Forecasts estimates that economic activity will grow 1.0% in 2026, while year-over-year inflation rose to 3.2% in August, still above the European Central Bank's 2.0% target. The ECB raised its monetary policy rate by 25 basis points in September and market analysts anticipate another adjustment toward the end of the year. For Latin America, the cited projections point to growth of 2.0% during 2026. Inflation remains above targets in several regional economies, affected by the energy component. Although most central banks kept their monetary policy rates unchanged, analysts anticipate increases in some economies before the end of the year. Year-over-year inflation in the Dominican Republic fell from 5.67% in June to 5.13% in August, while underlying inflation moderated to 4.76%. The latter indicator excludes the most volatile goods in the consumption basket and remained within the target range established by the monetary authority. Year-over-year inflation in the Dominican Republic fell to 5.13% in August. (EFE/Orlando Barría) The BCRD attributed part of this trajectory to the subsidies applied by the Dominican government, which allowed only a partial pass-through of the increase in refined petroleum products to fuel prices. The institution's forecasting system projects that year-over-year inflation will return to the range of 4.0% ± 1.0% during the fourth quarter, while medium-term expectations remain aligned with the center of the Monetary Program's target. The monetary authority warned that inflation prospects retain upside risks, linked to the evolution of war conflicts and the effects of weather phenomena on food. Faced with this outlook, the institution reported that it will continue to actively manage the liquidity of the financial system to keep it at adequate levels. Private credit in domestic currency grew about 7.5% year-over-year at the end of August, driven mainly by financing to productive sectors. At the same time, economic activity accumulated an expansion of 4.5% in the first eight months of 2026, supported by construction, financial intermediation, and hotels, bars, and restaurants. Dominican economic activity accumulated an expansion of 4.5% in the first eight months of 2026. (Photo: courtesy) For the year as a whole, the central bank projects that the Dominican economy will grow around 4.5%, with support from investment and the resilience of the external sector. The foreign-currency-generating activities, according to the institution, contributed to the relative stability of the exchange rate and to an accumulated appreciation of the Dominican peso of close to 6% at the end of September. International reserves stood at around USD 15,400 million at the end of August, equivalent to about 11% of the gross domestic product and roughly five months of imports. The BCRD indicated that this level exceeds the metrics recommended by the International Monetary Fund and noted that it will continue to monitor the external scenario to adopt the measures it considers necessary based on inflation and macroeconomic stability.