Peru | Monetary pause continues in July

Summary

At its July meeting, the Central Bank's Board held its benchmark interest rate at 4.50%. In real terms, the rate remains close to the neutral rate.

Key points

• Key points:
• The benchmark interest rate stands at 2.2% in real terms, the same level recorded in May and June.
• The authority expects overall inflation to remain at the lower end of the target range (2% +/- 1%) in the coming months, and then move closer to the center of that range.
• Core inflation is expected to remain around the center of the target range over the projection horizon.
• Twelve-month inflation expectations remained unchanged at 2.28%, within the inflation target range.
• At BBVA Research, we estimate that the Central Bank will keep the policy interest rate unchanged in the coming months: a neutral monetary stance is consistent with the price outlook and the current cyclical position of the Peruvian economy. However, the bias in this forecast is to the downside, given that both headline and core inflation are slightly below the center of the target range.

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