Peru | Central Bank leaves its policy interest rate unchanged

Summary

In its August meeting, the Central Bank's Board of Directors held its benchmark interest rate at 4.50%. In real terms, the rate stood at 2.31% , a level consistent with a neutral monetary position.

Key points

• Key points:
• The benchmark rate stands at 2.31% in real terms , following the BCRP's third consecutive pause.
• The monetary authority expects total inflation to remain in the coming months near the lower end of the target range (2% +/- 1%) and then settle around 2%.
• Core inflation would remain around the center of the target range over the projection horizon.
• Twelve-month inflation expectations decreased from 2.3% in June to 2.2% in July, within the inflation target range.
• At BBVA Research, we estimate that the Central Bank will maintain the monetary policy rate at 4.50% in the coming months. This neutral monetary position is consistent with an outlook of no inflationary pressures and economic activity advancing at a pace close to its potential. However, the bias in this forecast is downward due to factors such as the decrease in inflation expectations and possible rate cuts by the Fed.

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