Peru Monetary Policy February 2019


Peru: Central Bank stands pat at February meeting

February 8, 2019

At its monetary policy meeting on 8 February, the Central Bank of Peru (BCRP) kept the policy interest rate unchanged at an eight-year low of 2.75%, matching market expectations. It last cut the policy interest rate in March 2018, by 25 basis points, which ended an easing cycle.

Moderate inflation, well-anchored inflation expectations and below-potential economic activity underpinned the Bank’s decision to hold the policy rate unchanged in February. Inflation came in at 2.1% in January, inching down from December’s 2.2% and remaining comfortably within the Central Bank’s target range of 1.0%–3.0%. Meanwhile, economic activity accelerated in both October and November, while consumer confidence fell in January. This indicates the economy gained traction in the fourth quarter, although growth likely remained below potential and inflationary pressures were consequently contained. Moreover, uncertainties seem to persist among consumers’ perceptions of the near-term performance of the economy.

The Bank’s forward guidance was unchanged, reemphasizing that the BCRP will stand pat until both inflation and inflation expectations remain within the target range and economic growth approaches its potential. FocusEconomics panelists expect the monetary policy rate to increase only gradually this year, as growth firms up and inflation gains speed. The next monetary policy meeting will be held on 7 March.

Peru Interest Rate Forecast

FocusEconomics Consensus Forecast panelists see the monetary policy rate ending 2019 at 3.50%. For 2020, the panel projects a rate of 3.82% at the end of the year.

Author: Massimo Bassetti, Senior Economist

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Peru Monetary Policy Chart

Peru Monetary Policy February 2019

Note: Central Bank Reference Rate in %.
Source: Peru Central Bank (BCRP).

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