Peru | Central Bank hikes by 50bp again in response to unanchored inflation expectations

Summary

The Board of the Central Bank decided to increase the monetary policy rate from 1,00% to 1,50% in October. The Bank once again deems convenient to maintain an expansive policy stance for a prolonged period.

Key points

• Key points:
• The monetary authority argued that the higher inflation observed in September is a result of transitory supply factors such as the increase in the international price of food inputs and fuels, coupled with a higher exchange rate.
• The monetary authority stated that it expects inflation to return to the target range (2% +/- 1%) in the next twelve months and remain inside the range during the rest of 2022.
• The monetary authority seems to be responding to the acceleration of inflation expectations (that increased from 3,1% in August to 3,6% in September), seeking to guide them back to the target range.

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