Peru Interest Rate

Central Bank of Peru leaves rates unchanged in July

Bank holds for tenth consecutive meeting: At its meeting on 9 July, the Central Bank of Peru (BCRP) maintained the reference interest rate at 4.25%. This marked the tenth straight hold since September 2025 and was in line with market expectations.

Bank sees Iran energy price shock as temporary: The Bank ruled out a policy rate hike, as it expects inflation to return to its 1.0–3.0% target range as oil prices normalize once the supply shock from the Middle East conflict dissipates. However, it highlighted upside risks to the inflation outlook, including the re-escalation of the U.S.-Iran war and the impact of El Niño. A rate cut was also deemed unnecessary, as economic activity remained robust through June.

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 and a few anticipate rate cuts. The trajectory of global commodity prices and domestic inflation remains key to watch. The BCRP is scheduled to reconvene on 13 August.

Panelist insight: On the outlook, Goldman Sachs’ Santiago Tellez said: “In our view the reiterated emphasis on the transitory nature of the supply shocks suggests that the MPC remains inclined to look through the increase in headline and core inflation. We maintain our policy rate forecast of 4.25%, under our base case that headline and core inflation are tracking close to their peaks, inflation expectations have stabilized within the target band, and global energy prices will not spike to a permanently higher level.” BBVA analyst Hugo Vega commented: “Given the estimated neutral interest rate of around 2%, the current level of monetary policy would have an expansionary bias that would not be required given the strength of domestic demand. Considering this, but also that inflation has been hovering around 4% (outside the target range) for several months now, and that this situation is likely to continue for several more months, it is difficult to rule out the possibility that the Central Reserve Bank of Peru (BCRP) will decide to adjust monetary policy in the coming months, although we believe the probability of this happening at the next meeting (August) is limited.”

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