Peru | New monetary pause: BCRP shows no rush to complete the normalization process

Summary

In its December meeting, the Board of the Central Bank kept the reference interest rate at 5.00%. The monetary policy stance, understood as the ex-ante real reference rate, remains contractionary.

Key points

• Key points:
• The authority expects both headline and core inflation to remain within the target range over the projection horizon. It also states that economic activity is now around its potential level.
• The statement accompanying this decision highlighted that global inflation has continued to decline, albeit at a slower pace, and that monetary policy normalization in most advanced economies remains gradual. It also noted that uncertainty persists regarding the implementation of global trade policies.
• At BBVA Research, we anticipate two 25bp cuts to the reference rate before the end of the second quarter of 2025, aligning it with the neutral rate (4.5% in nominal terms). The timing of these cuts will largely depend on developments in financial markets.

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