Peru | BCRP maintains policy rate at 7.75% and shows no signs of cuts coming very soon

The Board of the Central Bank decided to maintain the monetary policy rate at 7.75% in July. The Bank maintained the monetary policy stance understood as the real ex-ante policy rate at a restrictive level and gives no signal of rate cuts happening soon.

Key points

• Key points:
• The policy rate now stands at 3.92% in real terms (June: 3.54%).
• The Bank remarked that inflation has been affected recently by food supply restrictions in a transitory manner.
• The monetary authority sharpened its inflation forecast: it expects it to get close to the target range (2% +/- 1%) by the end of the year and reach it in the first months of 2024.
• One year ahead inflation expectations decreased from 4.2% in May to 3.8% in June.
• We believe that the first policy rate cut will happen in October most probably, although the Central Bank does not rule out future rate hikes on its announcement yet.

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