Macchu Picchu Peru

Peru Monetary Policy April 2022

Peru: Central Bank raises rates for ninth consecutive time at April meeting

At its 7 April meeting, the Central Bank of Peru raised its key policy interest rate by 50 basis points to 4.50%, pushing it to its highest level since April 2009. The decision took the cumulative total of hikes since August 2021 to 425 basis points.

The raise reflected worsening concerns around spiraling inflation in recent months—the annual rate hit 6.8% in March—driven largely by higher food and fuel prices. The Bank now excepts inflation to start declining in July as some upside drivers moderate, easing inflation to back within the 1.0–3.0% target range between Q2 2023 and Q3 2023. In the short term, a relatively weak exchange rate, global supply disruptions amid the war in Ukraine, and high energy and food prices will keep inflation elevated.

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 second quarter ahead.

The next monetary policy meeting is scheduled for 12 May.

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