Peru | BCRP maintains the policy rate in spite of persistent inflation

Summary

The Board of the Central Bank decided to maintain the monetary policy rate at 7.75% in April. The Bank maintained the monetary policy stance understood as the real ex-ante policy rate at a restrictive level.

Key points

• Key points:
• The policy rate now stands at 3.45% in real terms (March: 3.46%).
• The Bank remarked that inflation has been affected by restrictions in food supply and rainfall over the last month.
• The monetary authority maintained its inflation forecast and expects it to return to the target range (2% +/- 1%) in the fourth quarter of this year.
• One year ahead inflation expectations remained at 4.3% in March while those for the end of 2023 increased from 4.5% to 4.7%.
• We believe that the monetary pause will probably continue in the following months, although the risk is that it extends if new supply shocks generate more inflation persistence.

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