Publications

The Central Reserve Bank of Peru (BCRP) kept the benchmark interest rate at 4.25% for the thirteenth consecutive month, surprising the market. However, it reiterated its willingness to make short-term adjustments, maintaining an upward bias as annual inflation rose to 4.5% in September.

The CBRT kept rates unchanged and signaled a further reliance on macroprudential measures. Despite some moderation in demand conditions and favorable seasonal factors on inflation, domestic and external uncertainties continue to pose challenges to the disinflation process.

Recent policy impulses could support the acceleration in the economic activity further. We upgrade our GDP growth to 0.8% and 4% for 2019 & 2020 respectively with a higher support from Domestic Demand.

The Central Bank reduced the policy rate by 250 bps to 14% from 16.50%, much higher than market expectation (100bps). We think that the CBRT should start to increase caution in the magnitude of the policy rate cuts as global uncertainty remains well alive and the CBRT should be ready to react at any moment if needed.

The Central Bank (CBRT) left its policy rate (one-week repo, 24%) unchanged in line with the consensus (vs. our expectation of 100bps hike). The press release after the decision is almost the same with the previous one, except for the stress over the slow-down in economic activity “partly due to tighter financial conditions”.