Peru Monetary Policy April 2019


Peru: Central Bank stands pat at March meeting

April 12, 2019

At its monetary policy meeting on 11 April, 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, declining inflation expectations and robust yet still-below-potential economic activity led the Bank to hold the policy rate unchanged in April. Inflation came in at 2.2% in March, rising from February’s 2.0% but remaining comfortably within the Central Bank’s target range of 1.0%–3.0%. Meanwhile, economic activity softened in January following a notable acceleration in the fourth quarter, and consumer confidence plunged in March, although businesses grew more optimistic in Q1. Overall, the data suggests growth slowed in the first quarter of the year, remaining below potential, and inflationary pressures were consequently contained.

The Bank’s forward guidance was unchanged, reemphasizing that the BCRP will stand pat as long as 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 9 May.

Peru Interest Rate Forecast

FocusEconomics panel sees the monetary policy rate ending 2019 at 3.27% and 2020 at 3.67%.

Author: Massimo Bassetti, Senior Economist

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Peru Monetary Policy Chart

Peru Monetary Policy February 2019 1

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

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