PERU: BCRP Remains on Hold as Expected, Maintains Data Dependent Stance
Jan-09 09:47
- The BCRP left its reference rate unchanged at 4.25% for a fourth consecutive meeting last night, as was widely expected. The accompanying policy statement was similar to before, with the Board maintaining a data dependent stance. The door remains open to a further rate cut, but with the real policy rate already close to the neutral level, several analysts expect the BCRP to remain on hold for the foreseeable future.
- On the inflation front, the Board continues to expect headline inflation to approach the midpoint of the 1-3% target range in the coming months. It also still sees core inflation around 2% in the projected horizon. Meanwhile, inflation expectations remain stable within the target range.
- Meanwhile, economic activity remains around its potential level, with leading indicators still showing “sound performance” and almost all current indicators still in “optimistic territory” – although no longer improving. On the external front, the Board has dropped the reference to global trade tensions, but the outlook still points to “moderate growth”, slightly lower than last year.
- Overall, the Board reiterates that future rate adjustments will depend on new information about inflation, particularly core inflation, inflation expectations and economic activity. The next MPC meeting is scheduled for February 12.
- Link to BCRP policy statement here.
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