Peru Interest Rate

Central Bank of Peru leaves rates unchanged in August

Bank holds for eleventh consecutive meeting: At its meeting on 13 August, the Central Bank of Peru (BCRP) maintained the reference interest rate at 4.25%. This marked the eleventh straight hold since September 2025 and was in line with market expectations.

Bank sees Iran energy price shock as temporary: The BCRP held as inflation has remained above its 1.0-3.0% target range and inflation expectations for 2026 were revised up to the upper bound of the target range in July. Still, the Bank opted not to hike as it expects inflationary pressures to ease as temporary supply shocks from the Middle East conflict dissipate, but highlighted upside risks to the inflation outlook, including the re-escalation of the U.S.-Iran war and the impact of El Niño. Favorable economic activity also supported the decision to remain on hold.

Bank likely to hold until year-end: The Central Bank did not provide specific forward guidance. A majority of our panelists expect the Bank to stand pat through the end of the year, while a minority see room for hikes or cuts. The trajectory of global commodity prices and domestic inflation as a result remains key to watch. The BCRP will reconvene on 10 September.

Panelist insight: On the outlook, Goldman Sachs’ Santiago Tellez said: “We anticipate that headline inflation will continue to rise in upcoming months, drifting away from the target band and overshooting the central bank’s projections. With a real ex ante rate at 1.2% […] the policy stance has turned too accommodative for the macro outlook, with rising inflation, robust domestic demand, a tight labor market, and multiple supply shocks—even if the latter are temporary—given increasing risk of second-round price effects. After this decision, we are pushing back our 25bp rate forecast by one MPC meeting, but acknowledge that the next policy decision will be highly data-dependent, and a low inflation reading or the stabilization of inflation expectations could reinforce the wait-and-see stance.”

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