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Peru Monetary Policy December 2023

Peru: Central Bank cuts rates again in December

At its 14 December meeting, the Central Bank of Peru (BCRP) cut its key policy interest rate to 6.75% from 7.00%, delivering its fourth consecutive rate cut.

The decision to ease the monetary policy stance further was driven by declining headline and core inflation as well as falling market inflation expectations. Additionally, the Bank expects price pressures to continue their downtrend, with inflation moving within the Bank’s target range of 1.0–3.0% in early 2024 and core inflation doing the same in December 2023. Meanwhile, economic indicators continue to hint at subdued activity due to the El Niño weather phenomenon and social unrest.

The Bank did not give explicit forward guidance in its press release; it reiterated that future adjustments to the reference rate would be conditional on new information on inflation and its determinants. Most of our panelists see further rate cuts next year in line with a projected decline in inflation. The next monetary policy meeting is scheduled for 11 January 2024.

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