Macchu Picchu Peru

Peru Monetary Policy December 2022

Peru: Central Bank raises rates again in December

At its 7 December meeting, the Central Bank of Peru raised its key policy interest rate by 25 basis points to 7.50%, bringing the cumulative increase for the year to 500 basis points.

The Bank continued to hike rates in order to curb elevated inflation and bring down inflation expectations, both of which remain well above the 1.0–3.0% target range. Inflation rose to 8.4% in November from Octobers 8.3%, while inflation expectations over the next 12 months moderated from 4.8% to 4.7%. That said, the Bank sees inflation moving 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 declining 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 in 2023 as inflation moderates, partially due to the lagged effect of previous interest rate increases.

The next meeting is scheduled for 12 January.

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

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