Peru | BCRP hikes policy rate to 7,50% but tightening cycle could continue

The Board of the Central Bank decided to increase the monetary policy rate from 7.25% to 7.50% in December. The Bank tightened the monetary policy stance understood as the real ex-ante policy rate to a slightly more restrictive level.

Key points

• Key points:
• The policy rate increased by 25 basis points again and now stands at 2.82% in real terms (November: 2.47%).
• The Bank explained that the higher inflation observed in November is a result of the increase in the international price of food inputs and fuels.
• The monetary authority revised its inflation forecast and now expects it to return to the target range (2% +/- 1%) in the fourth quarter of next year.
• One year ahead inflation expectations decreased from 4.8% to 4.7% in November but those for the end of 2023 increased from 4,2% to 4,4%.
• We maintain that additional adjustments to the reference rate will be decided on a meeting-by-meeting basis and be highly dependent on the speed of descent of inflation and its expectations. We do not rule out any additional adjustment to the reference rate.

Geographies

Topics

Tags