PERU: Analyst Views on BCRP Interest Rate Decision
Jan-09 09:50
- BBVA says that the BCRP rate decision was backed by December CPI, which showed prices, particularly core, moving largely in line with pre-Covid trends and consistent with the BCRP’s 2% inflation target. The BCRP continues to lean against appreciation in the PEN, with ongoing intervention in the currency market. BBVA believes that this creates an asymmetry for a weaker PEN, which they have expressed through a long EURPEN trade idea.
- Goldman Sachs maintain their base case that the policy rate is likely to remain at 4.25% for the foreseeable future, given a largely closed output gap, well-anchored inflation expectations, and a policy stance virtually in neutral territory. At the current juncture, GS does not think that the MPC intends to use the policy rate as an instrument to counteract the recent FX appreciation. In GS’ view, the PEN strengthening has been more directly influenced by record high terms of trade and trade in goods surplus than by the interest rate differential with the Fed.
- JP Morgan maintain their baseline call for the BCRP to stay on hold for the foreseeable future, against the backdrop of a very strong terms‑of‑trade tailwind, an output gap that is essentially closed, and with labour and credit markets holding firm.
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