Peru | Central Bank hikes the policy rate and the policy stance approaches neutral level

Summary

The Board of the Central Bank decided to increase the monetary policy rate from 6.00% to 6.50% in August. The Bank tightened the monetary policy stance understood as the real ex-ante policy rate to a level close to neutral.

Key points

• Key points:
• The policy rate increased by 50 basis points again and now stands at 1.34% in real terms (July: 0.65%).
• The Bank explained that the higher inflation observed in July is a result of the increase in the international price of food inputs and fuels.
• The monetary authority changed its inflation forecast and now expects it to return to the target range (2% +/- 1%) in the second semester of next year.
• Inflation expectations decreased from 5.4% to 5.2% in July.
• We do not rule out that the Central Bank will continue hiking the policy rate somewhat more during the rest of the year.

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