Peru | More moderate hikes looking forward?

Summary

The Board of the Central Bank decided to increase the monetary policy rate from 2,00% to 2,50% in December. The Bank pointed out at the deterioration of expectations of domestic activity and a slower recovery of global activity, which could imply some moderation looking forward.

Key points

• Key points:
• The policy rate increased by 50 basis points for the fourth time in a row.
• The Bank argued that the higher inflation observed in December 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 maintains its expectation that inflation will return to the target range (2% +/- 1%) in the second half of next year.
• Looking forward, the Central Bank seems to consider that further monetary tightening is required, but the rhythm of adjustment should moderate.

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