SANTO DOMINGO –The Central Bank of the Dominican Republic (BCRD) announced yesterday that at its April 2025 monetary policy meeting, it decided to maintain its monetary policy interest rate (MPR) at 5.75% per annum. Likewise, the rate for the permanent liquidity expansion facility (1-day repos) remains at 6.25% per annum, while the rate for remunerated deposits (overnight deposits) continues at 4.50% per annum.
This measure took into account recent developments in the international environment, particularly the high volatility of financial markets, increased global uncertainty, and high interest rates in the United States. Domestically, the recovery of internal demand and the fact that inflation has remained within the target range of 4.0% ± 1.0% established in the Monetary Program for the past two years were also considered.
Indeed, year-on-year inflation was 3.58% in March 2025, while core inflation, which excludes the prices of the most volatile components of the consumer basket and is more directly linked to monetary conditions, stood at 4.24% in March, remaining around the midpoint of the target range. The Central Bank of the Dominican Republic's (BCRD) forecast models indicate that headline and core inflation will remain within the target range of 4.0% ± 1.0% during 2025 and 2026, under an active monetary policy scenario.
During the last half of 2024, the Central Bank reduced its benchmark interest rate by a cumulative 125 basis points and implemented a series of measures to accelerate the transmission of monetary policy in response to low inflationary pressures. In a context of high global uncertainty, the Central Bank of the Dominican Republic (BCRD) has been actively managing liquidity in the economy, and the Monetary Board adopted a set of macroprudential measures aimed at strengthening financial stability.
In the international arena, the US economic outlook has deteriorated due to increased uncertainty surrounding tariff and immigration policies, among other factors, with the growth projection for 2025 revised downward to 1.8%, according to the most recent estimates from the International Monetary Fund (IMF). Indeed, the US economy contracted by 0.3% quarter-on-quarter in January-March 2025, with first-quarter growth moderating to 2.0%. Meanwhile, inflation reached 2.4% in March, above the 2.0% target, while inflation expectations have risen; consequently, the Federal Reserve is maintaining its pause on cuts to its benchmark interest rate.
In the Eurozone, economic activity expanded by 1.2% year-on-year during the first quarter of 2025, with projected growth of 0.8% for the year, according to the IMF. This growth was impacted by geopolitical conflicts and trade tensions. Faced with slowing domestic demand, year-on-year inflation moderated to 2.2% in March 2025, moving closer to the European Central Bank's (ECB) target. In this context, the ECB lowered its policy rate by 25 basis points at its last meeting and is expected to continue making cuts throughout the remainder of 2025.
In Latin America, economic growth is projected to remain moderate through 2025, expanding by 2.0%, according to the IMF. However, given the current uncertainty and high external interest rates, most central banks are holding off on cutting their policy interest rates, including those in Chile, Costa Rica, Guatemala, Paraguay, Peru, and the Dominican Republic. Meanwhile, the central banks of Brazil and Uruguay have raised their benchmark interest rates in response to renewed inflationary pressures.
Regarding commodities, the price of West Texas Intermediate (WTI) crude oil fell to around US$60 per barrel at the end of April, influenced by expectations of lower global demand and increased production. Meanwhile, the price of gold surpassed US$3,300 per troy ounce in April, continuing its upward trend as it is used as a store of value in a turbulent international environment.
At the national level, the economy expanded by 5.4% year-on-year in March, accumulating 2.7% year-on-year growth during January-March 2025. Looking ahead, the Dominican economy is expected to grow by around 4.0%–4.5% in 2025, one of the highest expansions in the region; with room to implement economic policies that contribute to the dynamism of domestic demand as global uncertainty dissipates.
Monetary aggregates, such as currency in circulation (M1), broad money supply (M2), and broad money (M3), continue to grow at rates close to nominal GDP growth, consistent with the projections in the Central Bank of the Dominican Republic's Monetary Program. Meanwhile, the expansion of private credit in local currency has gradually moderated, with year-on-year growth of around 8% at the end of April.
On the other hand, in the first quarter of 2025, total exports registered year-on-year growth of 12.1%, and remittances expanded by 12.4%. Furthermore, Foreign Direct Investment is projected to exceed US$4.7 billion during 2025, comfortably covering the estimated current account deficit. The strong performance of foreign exchange-generating activities has helped mitigate the impact of high global uncertainty, with the Dominican peso appreciating by approximately 4.0% during 2025.
In this context, international reserves stood above US$15 billion in April, equivalent to 12% of gross domestic product and about five months of imports, exceeding the metrics recommended by the IMF.
It is important to highlight that the Dominican economy has strong macroeconomic fundamentals and a resilient productive sector, which are reflected in a better perception of country risk compared to the average for Latin America and other emerging economies. In this challenging international environment, the Central Bank of the Dominican Republic will continue to monitor economic developments and reiterates its commitment to continue adopting timely measures necessary to preserve macroeconomic stability and help keep inflation within the target range.
