Peru Monetary Policy April 2017


Peru: Central Bank holds interest rate at 4.25% in April

April 6, 2017

At its 6 April meeting, the Central Bank decided to maintain the reference rate at 4.25%, where it has been for 14 months now, in line with market expectations.

The decision comes against the backdrop of a surge in inflation due to disastrous weather woes related to an unexpectedly strong El Niño effect, which are nevertheless expected to be temporary. Meanwhile, core inflation was 2.6% in March, which is within the target range of 1.0% to 3.0%, further strengthening the decision to keep rates unchanged for now. Although the economy has been decelerating in Q1, an increase in public spending and higher export prices should keep GDP growth from deteriorating drastically.

The Central Bank struck a relatively neutral tone regarding forward guidance, saying that upcoming monetary policy decisions will depend on incoming data, in particular demand shocks on inflation. The Bank expressed its willingness to ease its monetary policy stance if necessary.

The next monetary policy meeting is scheduled for 11 May.

The majority of panelists participating in the LatinFocus Consensus Forecast see the monetary policy rate remaining largely unchanged this year, with the Consensus at 4.23% for the end of 2017. For 2018, the panel projects an average rate of 3.44% at the end of the year.

Author: Marlène Rump, Senior Data Analyst

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Peru Monetary Policy Chart

Peru Monetary Policy April 2017

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

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