Peru | Surprising pause, but door to future hikes remains open

Summary

The Board of the Central Bank decided to maintain the monetary policy rate at 7.75% in February. 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 3.38% in real terms (January: 3.45%).
• The Bank explained that the higher inflation observed in January is a result of the increase in the price of locally produced foodstuffs.
• 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 increased from 4.3% to 4.6% in January while those for the end of 2023 advanced from 4.3% to 4.7%.
• We believe that the monetary adjustment process has most likely concluded, although the Central Bank indicates in its statement that future decisions will depend on the new inflation data and its determinants.

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