Peru | BCRP keeps policy rate unchanged at 4.25%

Summary

In February, the BCRP kept the rate at 4.25% for the fifth straight month. This move, expected by the market, reflects a neutral stance with activity near potential and inflation converging to the midpoint of the target range. We expect the rate to stay at this level in the coming months.

Key points

• Key points:
• The BCRP held its policy rate at 4.25% for the fifth consecutive month, consistent with the estimated neutral range of 4.00% to 4.50%.
• Headline inflation (1.7%) and core inflation (2.0%) picked up in January, with the latter reaching the target's midpoint.
• Economic activity remains near potential, supported by exceptionally favorable terms of trade and robust domestic demand.
• Upward inflation normalization, pension fund withdrawals, and the electoral cycle limit the scope for additional rate cuts.

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