Peru | Monetary pause in February, in line with market consensus

Summary

The Board of Directors of the Central Bank decided to maintain the reference interest rate at 4.75% in February. The monetary policy position thus remains somewhat restrictive.

Key points

• Key points:
• The policy rate measured in real terms increased to 2.4% (from 2.3% the previous month), a level somewhat higher than what we estimate as neutral (2.0%).
• The Central Bank anticipates that inflation, currently at 1.9%, will approach the lower limit of the target range (2% +/- one percentage point) in the coming months, but that this will only be temporary and will then return to the center of that range.
• It also casts a positive tone on the behavior of the GDP.
• On the external side, the BCRP indicates that uncertainty remains regarding the impact of trade policies.
• At BBVA Research we consider that in this context the Central Bank has room to complete the monetary normalization process without haste and that the reference interest rate will reach its neutral level (4.50%) before the end of the second quarter.

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