The Central Bank of the Dominican Republic (BCRD), in its monetary policy meeting in December 2024, reduced its monetary policy interest rate (MPR) by 25 basis points, decreasing from 6.00% to 5.75% annually.
With this decision, the reference interest rate accumulates a decrease of 275 basis points since May 2023.
The program of decreases in the MPR, together with the monetary easing measures, should accelerate the reductions in bank interest rates to the extent that the monetary policy transmission mechanism operates.
The rate of the permanent liquidity expansion facility (1-day Repos) is reduced from 6.50% to 6.25% annually, while the interest-bearing deposit rate (Overnight) remains unchanged at 4.50% annually.
For this measure, the recent evolution of the international environment was taken into account, particularly the recent reductions in interest rates in advanced economies and global uncertainty.
Additionally, the good performance of the Dominican economy and monetary spaces was considered in the face of inflation that has remained in the lower part of the target range of 4.0% ± 1.0% during this year and the recent moderation of private credit.
Interannual inflation stands at 3.18% in November, while core inflation, which excludes the prices of the most volatile components of the basket and which is more directly associated with monetary conditions, remains around the center of the target, standing at 3.93% in November.
The BCRD forecast models indicate that both general and underlying inflation would remain within the target range of 4.0% ± 1.0% for the end of this year and during 2025, in an active monetary policy scenario. He highlighted that the country’s economy has strong macroeconomic fundamentals.
