Peru Monetary Policy March 2019


Peru: Central Bank stands pat at March meeting

March 8, 2019

At its monetary policy meeting on 8 March, 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.

Mild inflation, well-anchored inflation expectations and strengthening yet still below-potential economic activity led the Bank’s decision to hold the policy rate unchanged in March. Inflation came in at 2.0% in February, inching down from January’s 2.1% and remaining comfortably within the Central Bank’s target range of 1.0%–3.0%. Meanwhile, economic activity accelerated significantly in the fourth quarter, while consumer confidence surged in February and business confidence remained largely optimistic in January-February. This suggests growth remained vigorous in the first two months of the year, although it likely remained below potential and inflationary pressures were consequently contained.

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 11 April.

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 0

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

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