Macchu Picchu Peru

Peru Monetary Policy November 2022

Peru: Central Bank raises rates again in November

At its 10 November meeting, the Central Bank of Peru raised its key policy interest rate by 25 basis points to 7.25%, bringing the cumulative increase for the year to 475 basis points.

The Bank continued to hike rates in order to limit elevated inflation and bring down inflation expectations, both of which remain well above the 1.0–3.0% target range. Inflation dipped to 8.3% in October from Septembers 8.5%, while inflation expectations over the next 12 months moderated from 4.9% to 4.8%. That said, the Bank sees inflation moving back into the target range of 1.0–3.0% in the second half of 2023 amid lower international prices for food and energy.

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 also thanks to the lagged effect of previous interest rate increases.

The next meeting is scheduled for 7 December.

The LatinFocus panel sees the monetary policy rate ending 2023 at 5.71% and 2024 at 4.38%.

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