Peru | New cut in the Central Bank monetary policy rate

Summary

In its September meeting, the Board of the Central Bank decided to cut the policy rate by 25 basis points to 5.25%. 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 2.81% in real terms (August: 3.01%).
• 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 2.49% in July to 2.44% in August, within the inflation target range.
• At BBVA Research, we foresee two additional 25 basis point cuts to the reference rate during the remainder of the year. Considering that the Central Bank has explicitly stated it will return to a data-dependent mode, we condition our expectation of rate cuts on the absence of pressures in the foreign exchange market.

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