Peru | BCRP holds rate steady, but expects lower short-term inflation

Summary

At its June meeting, the Central Bank’s Board decided to keep the policy rate unchanged at 4.50%. The monetary policy stance, measured by the ex-ante real reference rate, remains around neutral.

Key points

• Key points:
• The policy rate now stands at 2.2% in real terms, similar to the previous month.
• The Central Bank expects headline inflation to remain in the lower bound of the target range (2% ± 1%) in the coming months before converging toward the midpoint. Core inflation is projected to stay around the midpoint over the forecast horizon.
• One year ahead inflation expectations stood at 2.27%, within the target range.
• At BBVA Research, we expect the Central Bank to maintain the policy rate unchanged in the coming months: a neutral stance is consistent with both the inflation outlook and the current cyclical position of the Peruvian economy. However, the bias to this forecast is to the downside, given that headline and core inflation are slightly below the midpoint of the target range and the local currency shows signs of appreciation.

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