MNI BCRP Preview - May 2025: Another Cautious Hold Most Likely

Download Full Report Here

Executive Summary

• A slender majority of analyst forecasts point to the BCRP continuing the pause of its easing cycle in May, keeping the reference rate at 4.75%.
• This would represent the committee’s fourth consecutive hold, providing policymakers with more time to assess the uncertain external backdrop.
• However, well behaved CPI inflation that remains below the mid-point of the target range and a below-expectation growth print for February should keep the option of a 25bp cut on the table.

After remaining on hold again last month, amid the deterioration in the external backdrop, the Board maintained its data dependent guidance, keeping the door open to renewed easing in the coming months. In its statement, the Board noted the expected improvement of inflation, while emphasising the high uncertainty stemming from the restrictive tariff measures and sounding a little less upbeat about the growth backdrop. Since then, inflation has picked up for the first time in five months, although it remains comfortably within the central bank’s 1-3% target range, while economic growth slowed to an eight-month low. At the IMF meetings last month, BCRP Governor Velarde continued to strike a cautious tone, suggesting some reluctance to cut again before the Fed next moves.