Peru | Central Bank resumes rate cuts

Summary

In its August decision, the Board of the Central Bank decided to cut the policy rate by 25 basis points to 5.50%. The monetary policy stance, understood as the real ex-ante reference rate, remains in restrictive territory.

Key points

• Key points:
• The policy rate now stands at 3.01% in real terms (July: 3.22%).
• The authority expects inflation to remain close to the centre of the target range (2% +/- 1%) in the following months and core inflation to follow a downward trend.
• One year ahead inflation expectations decreased from 2.53% in June to 2.49% in July, within the inflation target range.
• At BBVA Research we expect additional cuts to the reference rate during the rest of the year. The upcoming moves by the Federal Reserve and their impact on the interest rate spread and exchange rate volatility will be key factors for the timing, magnitude and number of these cuts.

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