Peru | BCRP moves the policy rate near its neutral level, now close to that point

In its January meeting, the Board of the Central Bank decided to cut the policy rate by 25 basis points to 4.75%. The monetary policy stance, understood as the real ex-ante reference rate, remains slightly above neutral.

Key points

• Key points:
• The policy rate now stands at 2.3% in real terms (December: 2.6%).
• The authority expects headline and core inflation to remain close to the centre of the target range (2% +/- 1%) in the following months.
• One year ahead inflation expectations remain slightly below 2.50%, within the inflation target range.
• At BBVA Research, we anticipate a final 25-basis-point cut to the policy rate in the coming months, before the end of the second quarter, bringing it to what we estimate as the neutral level (4.50% in nominal terms). We also maintain our view that the timing of the cut will depend largely on developments in financial markets.

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