Central Bank of Peru leaves rates unchanged in August

Central Bank stays put as expected: At its meeting on 14 August, the Central Bank of Peru (BCRP) decided to maintain the reference interest rate at 4.50%. This followed a cumulative 325 basis points of cuts from late 2023 to May this year.

Mild inflation, solid GDP growth and global uncertainty drive hold: The BCRP likely wanted to gauge the effects of its rate cuts over the past 18 months before acting again. With economic activity near potential, inflation comfortably inside the 1.0–3.0% target band and expected to hold there, and global uncertainty heightened by Trump’s tariffs, keeping policy unchanged was the sensible course.

Easing cycle close to an end: The Central Bank provided no explicit forward guidance on future interest rate moves. Most of our panelists anticipate rate cuts of 25 or 50 basis points by the end of this year, though some see rates on hold.

Panelist insight: On the outlook, Goldman Sachs’ Santiago Tellez said: “While our base case remains a September cut, its materialization is contingent on the external environment. We see an increased probability that this cut will be postponed to Q4. With a largely closed output gap, well-anchored inflation expectations, and only a marginally restrictive policy stance, there is limited urgency to either address inflationary pressures or stimulate economic growth.”

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