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Peru Monetary Policy March 2023

Peru: Central Bank stands pat in March; hikes possible ahead

At its 9 March meeting, the Central Bank of Peru kept its key policy interest rate unchanged at 7.75%.

The Bank decided to stand pat amid a weaker growth panorama and moderating inflation expectations. Inflation expectations over the next 12 months decreased from 4.6% to 4.3%, while inflation expectations for 2023 as a whole fell to 4.5% from 4.7% in January. Meanwhile, inflation remained stable at January’s 8.7% in February. That said, the Bank expects inflation to move back into the target range of 1.0–3.0% in the fourth quarter of 2023 amid lower international prices for food and energy, easing supply chain disruptions and decreasing inflation expectations. Still, our panelists see inflation ending the year above target.

The Bank stated that March’s decision does not mean the end of the tightening cycle and that it stands ready to resume hiking depending on future inflation figures, the evolution of economic activity and the potentially prolonged impact of social turmoil following former President Pedro Castillo’s attempted coup in December.

The next meeting is scheduled for 13 April.

The LatinFocus panel sees the monetary policy rate ending 2023 at 5.78% and 2024 at 4.35%.

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