Macchu Picchu Peru

Peru Monetary Policy October 2019

Peru: Central Bank stands pat in October

At its monetary policy meeting on 10 October, the Central Bank of Peru (BCRP) kept the policy interest rate unchanged at a nine-year low of 2.50%. Analysts’ expectations were divided, with some expecting a 25-basis-point cut in October.

Inflation within the target band and easing inflation expectations, coupled with some signs of recovery in economic activity at the start of Q3, prompted the Bank to stay put in October. Inflation edged down to 1.9% in September (August: 2.0%), thus falling below the midpoint of the Central Bank’s target range of 1.0%–3.0%. Meanwhile, economic activity picked up in July, thanks to a sustained recovery in the secondary and tertiary sectors, and upbeat public investment in September should have boosted overall growth.

In its forward guidance, the Bank remarked that monetary policy has to remain expansionary as inflation is expected to remain slightly below the midpoint of the target band amid softer-than-expected growth in domestic demand. Although the current policy interest rate is projected to ensure inflation returns to the target range, the Bank will assess the evolution of price pressures ahead to adjust the course of monetary policy.

The next monetary policy meeting will be held on 7 November.

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