Peru | Central Bank maintains the monetary policy rate at 0,25%

Summary

The Board of the Central Bank decided to maintain the monetary policy rate at 0,25% in June. The Bank renewed its commitment to maintain a strongly expansive stance for a prolonged period and showed greater concern for inflation, estimating it will fall below the target range this year.

Key points

• Key points:
• The monetary authority also emphasized the measures adopted to provide liquidity and maintain the payments chain unbroken. PEN 44,3 billion have already been injected to the system, with roughly half of that corresponding to the Reactiva Peru program.
• Our baseline scenario contemplates the monetary policy rate remaining at this level at least until the end of 2021, given the expected impact of the coronavirus crisis on economic activity.
• We also believe that, if successful, the new unconventional monetary policy instrument announced this week (repurchase agreements tied to loan rescheduling at lower rates) can help boost the monetary stimulus.

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