Peru: Central Bank cuts rates again in November
At its 9 November meeting, the Central Bank of Peru (BCRP) cut its key policy interest rate to 7.00% from 7.25%, delivering its third consecutive rate cut.
The decision to ease the monetary policy stance further was driven by declining headline and core inflation and stable market inflation expectations. Moreover, 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. Meanwhile, economic indicators hinting at slowing activity also supported the reduction of the policy interest rate.
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 an expected decline in inflation. The next monetary policy meeting is scheduled for 14 December.
Meanwhile, Andrés Pérez and Julio Ruiz from Itaú Unibanco stated:
“We expect the central bank to continue easing its monetary policy stance, at the same pace, in the last meeting of the year (reaching a level of 6.75%), continuing until July 2024 (our end of 2024 policy rate forecast is at 5.00%). In our view, weak activity amid falling inflation supports our call.”