Peru: Central Bank raises rates for eleventh consecutive time at June meeting
At its 9 June meeting, the Central Bank of Peru raised its key policy interest rate by 50 basis points from 5.00% to 5.50%, pushing it to its highest level since April 2009. The decision took the cumulative total of eleven hikes since August 2021 to 525 basis points.
The hike reflected increasing concerns about escalating inflation in recent months. Inflation reached 8.1% in May, driven largely by spiking food and fuel prices. The Bank confirmed that it expects inflation to start declining in July as some upside drivers such as a relatively weak exchange rate and high commodity prices moderate, while the economy expands below potential. It expects inflation to fall back within the 1.0–3.0% target range between Q2 2023 and Q3 2023.
Looking ahead, the Bank reiterated that it would “consider [if necessary] further adjustments to the monetary stance so that inflation returns to the target range over the forecast horizon”. As such, the majority of panelists see rates being raised further during the third quarter.
The next monetary policy meeting is scheduled for 7 July.