Peru Monetary Policy

Peru

Peru: Central Bank hikes interest rate to 3.75% in December amid high inflation and expected Fed rate hike

December 10, 2015

The Central Bank decided to hike the reference rate from 3.50% to 3.75% at its 10 December monetary policy session, meeting market expectations. The Bank’s hike is the second in the past four months and is designed to counter inflation fueled in part by currency depreciation. The hike is also seen as a preemptive move ahead of the expected U.S. Federal Reserve rate hike, which will likely trigger capital outflows and put further pressure on the sol.

According to the Central Bank, inflation pressures have increased again due to higher prices for food and ongoing currency weakness. Inflation jumped from 3.7% in October to 4.2% in November, which far exceeds the upper limit of the Bank’s target range of 1.0%–3.0%. The Bank also explained that inflation expectations are above the target range, although monetary authorities are confident that the interest rate hike will help reduce inflation heading into 2016.

The Central Bank explained that the Peruvian economy continues to perform below potential, but that that a gradual recovery is underway and GDP growth should accelerate in the final quarter of the year. The Bank expects further improvements going forward and foresees the economy performing close to its potential in 2016. As for international developments, the Bank noted that there were mixed signals regarding the recovery of the global economy and that there is still volatility in foreign exchange and financial markets.

Unlike other meetings, the Bank did not mention whether it was specifically considering further adjustments if inflation strays from its long-term target range. The first monetary policy meeting of next year is scheduled for 14 January.

Panelists participating in the LatinFocus Consensus Forecast expect an average monetary policy rate of 4.17% at the end of 2016. For 2017, the panel projects an average rate of 4.26% at the end of the year.


Author:, Economist

Sample Report

Looking for forecasts related to Monetary Policy in Peru? Download a sample report now.

Download

Peru Monetary Policy Chart


Peru Monetary Policy December 2015

Note: Central Bank Reference Rate in %.
Source: Peru Central Bank (BCRP).


Peru Economic News

  • Peru: Central Bank stands pat at June meeting

    June 13, 2019

    At its monetary policy meeting on 13 June, the Central Bank of Peru (BCRP) kept the policy interest rate unchanged at an eight-year low of 2.75%, matching market expectations.

    Read more

  • Peru: Business confidence at its lowest in seven months

    June 7, 2019

    The business confidence indicator declined from April’s 55.9 to 52.9 in May, but nevertheless remained above the 50-point threshold that separates optimism from pessimism, where it has been for over two years. May’s decline came on the back of worse assessments of current conditions, and of less rosy expectations on the economy as a whole and on the situation of the company.

    Read more

  • Peru: Trade surplus at six-month low in April

    June 7, 2019

    Peru’s trade balance recorded a USD 259 million surplus in April, narrowing from March’s USD 471 million surplus as well as from the USD 340 million surplus recorded in the same month of last year. Exports dipped 2.3% year-on-year in April, due to lower prices more than offsetting higher quantities, following March’s much sharper 10.7% plunge.

    Read more

  • Peru: Inflation at 20-month high in May

    June 3, 2019

    Consumer prices in Metropolitan Lima rose 0.15% over the previous month in May, down from April’s 0.20% month-on-month rise.

    Read more

  • Peru: Growth sinks to two-year low in Q1

    May 27, 2019

    GDP growth in the first quarter of the year fell to 2.3%, which was less than half Q4 2018’s 4.7% expansion and marked the slowest increase in two years.

    Read more

More news

Search form