Macchu Picchu Peru

Peru Monetary Policy October 2022

Peru: Central Bank raises rates again in October

At its 6 October meeting, the Central Bank of Peru raised its key policy interest rate by 25 basis points to 7.00%, bringing the cumulative increase for the year to 450 basis points.

The Bank continued to tighten its stance in order to curb elevated inflation and anchor inflation expectations. Both inflation and inflation expectations remain well above the 1.0–3.0% target range: Inflation rose to 8.5% in September from August’s 8.4%, while inflation expectations moderated from 5.1% to 4.9% between the same two months. That said, the Bank sees inflation moving back into the target range of 1.0–3.0% in the second half of 2023.

The Bank reiterated that it was prepared to take additional steps to ensure inflation returns to target. Our panelists expect the tightening cycle to continue for the remainder of this year. However, rates are close to the projected peak; inflation is expected to decline in Q4, and the Central Bank should start to loosen its stance in 2023.

The next meeting is scheduled for 10 November.

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