Peru | BCRP continues hiking the policy rate given a more challenging inflation scenario

Summary

The Board of the Central Bank decided to increase the monetary policy rate from 4.00% to 4.50% in April. The Bank now expects inflation to return to the target range between the second and third quarter of next year.

Key points

• Key points:
• The policy rate increased by 50 basis points for the fourth time in a row.
• The Bank stated that the higher inflation observed in March is a result of further significant rises in the international price of food inputs and fuels.
• The monetary authority modified its inflation forecast and now expects it to return to the target range (2% +/- 1%) between the second and third quarter of next year (previously: in the first half of 2023).
• Inflation expectations increased from 3.8% to 4.4% in March.
• We expect the Central Bank to continue hiking, taking the reference rate to 5.50% in 3Q22 given a more challenging inflation outlook.

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