Published on Friday, August 11, 2023

Peru | BCRP leaves everything ready for rate cut soon

The Central Bank's Board of Directors decided to keep the reference rate at 7.75% in August but gave a markedly dovish twist to the statement explaining the decision. The monetary policy stance, understood as the ex-ante real policy rate, goes further into restrictive territory.

Key points

  • Key points:
  • The policy rate now stands at 4.18% in real terms (July: 3.92%).
  • The Bank remarked that inflation has been affected recently by food supply restrictions in a transitory manner.
  • The monetary authority maintained its inflation forecast: it expects it to get close to the target range (2% +/- 1%) by the end of the year and reach it in the first months of 2024.
  • One year ahead inflation expectations decreased from 3.8% in June to 3.6% in July.
  • We believe the Central Bank has left everything ready to start the rate cut process as soon as September, although the magnitude and speed of the cuts for the remainder of the year is subject to greater uncertainty.

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