Macchu Picchu Peru

Peru Monetary Policy May 2024

Peru: Central Bank cuts again in May

At its 9 May meeting, the Central Bank of Peru (BCRP) cut its key policy interest rate to 5.75% from 6.00%, following April’s similar-sized cut.

The BCRP’s decision to extend its easing cycle was due to April’s moderation in price pressures. Inflation fell to 2.4% in the month from March’s 3.0%, while the Bank’s measure of core inflation dipped from 3.0% from 3.1%. Meanwhile, 12-month inflation expectations remained unchanged at 2.6%, therefore remaining comfortably within the Bank’s 1.0-3.0% target range. Moreover, the Bank expects inflation to continue its downtrend in the next few months.

The Bank did not give explicit forward guidance in its press release; it reiterated that future adjustments to the reference rate would be conditional on new information relating to inflation and its determinants. Most of our panelists see further rate cuts this year in line with a projected decline in inflation. The next monetary policy meeting is scheduled for 13 June.

Itaú Unibanco’s Andrés Pérez and Julio Ruiz are hawkish on the outlook:

“Well behaved inflation amid a fragile activity recovery suggests there is still room for the BCRP to continue easing. However, increased uncertainty regarding the start of the Fed’s easing cycle considering the narrowing of the BCRP-Fed rate differential limits how low the policy rate can go in the short term. Our base case is for the BCRP to keep the policy rate unchanged during the rest of year, relying on lowering the reserve requirement rate to ease financial conditions, instead. Still, we cannot rule out an additional policy rate reduction this year (risking pressure on the currency) if inflation surprises further to the downside.”

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest