Monetary authorities project that investment and a strong external sector will help the economy achieve growth of around 4.5% in 2026
SANTO DOMINGO.- The Central Bank of the Dominican Republic (BCRD) decided to maintain 5.25% annually its monetary policy rate (MPR) during August 2026, considering the dynamism of the Dominican economy and the inflationary pressures derived from the increase in international oil prices, amid the uncertainty caused by the conflict in the Middle East.
The monetary authority reported that it also maintained the rate of the permanent liquidity expansion facility (Repos a uno a uno) at 5.75% per annum , while the rate of remunerated deposits (Overnight) remains at 4.50% per annum .
Inflation continues to approach the target range
The Central Bank of the Dominican Republic (BCRD) highlighted that year-on-year inflation moderated from 5.67% in June to 5.47% in July, beginning a gradual process of convergence towards the target range of 4.0% ± 1.0%.
Meanwhile, core inflation, which excludes goods and services whose prices are more volatile, stood at 4.96%, remaining within the target set by the monetary authority.
According to the agency's forecasting system, inflation would return to the target range during the fourth quarter of 2026.
Dominican economy grows 4.6% in July
The Monthly Indicator of Economic Activity (IMAE) registered a year-on-year growth of 4.6% in July, accumulating an expansion of 4.5% during the first seven months of the year.
This performance was primarily supported by the construction, mining, financial intermediation and hotels, bars and restaurants.
Monetary authorities project that investment and the strength of the external sector will contribute to the economy achieving growth close to 4.5% in 2026, placing it among the fastest-growing economies in Latin America.
Oil continues to put pressure on prices
The Central Bank noted that the price of West Texas Intermediate (WTI) crude oil remained high during August due to the prolonged conflict in the Middle East, settling at around US$85 per barrel at the end of the month.
The institution warned that refined fuel prices have increased at a higher rate than crude oil prices, generating additional pressure on domestic costs.
To mitigate these effects, the Dominican government maintains a subsidy program that allows it to partially pass on to consumers the increase in the prices of petroleum derivatives.
Dominican peso registers appreciation of over 7%
The dynamism of foreign exchange generating activities, together with the depreciation of the US dollar in international markets, has contributed to the relative stability of the exchange rate.
At the end of August, the Dominican peso had accumulated an appreciation of more than 7%, a behavior that, according to the BCRD, has also been observed in several Latin American countries that operate under inflation targeting schemes.
Furthermore, international reserves remain above US$15 billion, equivalent to approximately 11% of GDP and five months of imports, exceeding the metrics recommended by the International Monetary Fund (IMF).
Private credit grows by around 8%
In a context of active management of the financial system's liquidity, private credit in national currency registered an expansion of close to 8% year-on-year at the end of July.
Growth was driven primarily by financing for productive sectors, while the Central Bank seeks to maintain monetary conditions that favor the stability of bank interest rates.
The international environment maintains high risks
The decision by the Central Bank of the Dominican Republic (BCRD) also took into account the evolution of the main economies and the risks associated with the international scenario.
In the United States, growth is projected at 2.2% for 2026, while year-on-year inflation reached 3.4%, still above the Federal Reserve's 2% target. The labor market, meanwhile, has shown signs of weakening.
The Eurozone is forecast to expand its economy by 0.7% this year, affected by the armed conflict, while inflation reached 2.9% in July, above the target of 2%.
For Latin America, projections point to regional growth of 2% in 2026, in a scenario where several economies face inflationary pressures associated with the energy component.
Reserves and fundamentals support stability
The Central Bank of the Dominican Republic (BCRD) highlighted that the Dominican economy maintains solid fundamentals, a stable financial system, and a resilient private sector, factors that, together with monetary and fiscal policies, contribute to facing the complex international landscape.
The institution reiterated that it will continue to monitor the evolution of the global economy and its possible effects on the country, with special attention to energy prices, weather phenomena and their impact on food.
The Central Bank also reaffirmed its commitment to meeting the inflation target and preserving the macroeconomic stability of the Dominican Republic.
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