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Peru: Central Bank of Peru keeps interest rates stable in February
Latest bank decision: At its meeting on 13 February, the Central Bank of Peru (BCRP) decided to leave the policy rate at 4.75%, following total rate cuts of 300 basis points since mid-2023.
Monetary policy drivers: The BCRP likely decided to stay put to evaluate the impact of the significant monetary easing over the last 18 months; at its previous meeting the Central Bank suggested that the policy rate was now close to the neutral level. With both headline and core inflation currently comfortably within the BCRP’s 1.0-3.0% target range, there was no pressure to change rates.
Policy outlook: The Central Bank’s forward guidance was open-ended. All our panelists see at least one extra rate cut between now and the end of the year, given inflation should remain muted.
Panelist insight: On the outlook, Goldman Sachs’ Santiago Tellez said:
“Our view remains unchanged: the MPC will be patient in delivering what we view as a final 25bp rate cut to 4.5%, which would bring the policy rate to broad neutrality (i.e. ex-ante real rate stands now at 2.3% vs. an estimated real neutral rate of 2.0%). Our base case remains that this cut will be delivered in Q2, but its materialization will likely be constrained by the volatile external backdrop.”
