Introduction to Monetary Policy
The Central Bank of the Dominican Republic has made a significant decision regarding its benchmark interest rate. In June 2025, the bank chose to leave its benchmark rate unchanged at 5.75%. This decision comes after a series of cuts totaling 125 basis points since mid-2024.
Global Economic Factors
The decision to keep the benchmark rate steady is largely influenced by global economic uncertainty. Geopolitical conflicts and volatile oil prices are key factors contributing to this uncertainty. Additionally, high interest rates in the United States, coupled with the risks of inflation due to tariffs, play a significant role in the Central Bank’s decision-making process.
Domestic Economic Measures
On the domestic front, the Central Bank has implemented recent liquidity measures aimed at supporting private sector credit. As these measures take effect, the transmission of monetary policy is expected to strengthen, positively impacting the economy.
Inflation Rates
Inflation levels have been closely monitored and have remained within the targeted range of 4.0% ± 1.0%. As of May, the headline inflation stood at 3.84%, while core inflation was at 4.22%. These figures indicate that the economy is experiencing stable price levels, which is a positive sign for economic health.
Future Projections
Looking ahead, the Central Bank projects that both headline and core inflation will continue to stay within the target range through 2026. This projection suggests a level of confidence in the current monetary policy stance and its ability to maintain economic stability in the near future.
Conclusion
In conclusion, the Central Bank of the Dominican Republic’s decision to maintain its benchmark interest rate at 5.75% reflects a careful consideration of both global and domestic economic factors. With inflation under control and liquidity measures in place to support the private sector, the bank’s monetary policy aims to navigate the challenges of global uncertainty while promoting economic growth and stability at home.
