Peru | Policy rate unchanged in a context of lower inflation expectations

Summary

The Board of the Central Bank decided to maintain the monetary policy rate at 7.75% in March. The Bank maintained the monetary policy stance understood as the real ex-ante policy rate at a restrictive level.

Key points

• Key points:
• The policy rate now stands at 3.46% in real terms (February: 3.13%).
• The Bank remarked that inflation has been affected by the social conflicts the country has experienced since December.
• The monetary authority maintained its inflation forecast and expects it to return to the target range (2% +/- 1%) in the fourth quarter of next year.
• One year ahead inflation expectations decreased from 4.6% to 4.3% in February while those for the end of 2023 fell from 4.7% to 4.5%.
• We believe that the monetary pause will probably continue, although the Central Bank does not rule out future hikes in its policy announcement.

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