Macchu Picchu Peru

Peru Monetary Policy January 2023

Peru: Central Bank hikes again in December

At its 12 January meeting, the Central Bank of Peru raised its key policy interest rate by 25 basis points to 7.75%.

The Bank continued to tighten the monetary policy stance in order to reduce elevated inflation and bring down inflation expectations, both of which remain well above the 1.0–3.0% target range. Inflation rose to 8.5% in December from Novembers 8.4%, while inflation expectations over the next 12 months moderated from 4.7% to 4.3%. That said, the Bank expects inflation to move back into the target range of 1.0–3.0% in the fourth quarter of 2023 amid lower international prices for food and energy and decreasing inflation expectations.

The Bank reiterated that it was prepared to take additional steps to ensure inflation returns to target. That said, our panelists expect rates to decline this year as inflation moderates, partially thanks to the lagged effect of previous interest rate increases.

The next meeting is scheduled for 9 February.

The LatinFocus panel sees the monetary policy rate ending 2023 at 5.78% and 2024 at 4.35%.

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