MNI Peru CB Preview – April 2026: Risk of Hawkish Tilt

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Executive Summary

• The BCRP is widely expected to leave its benchmark reference rate unchanged at 4.25% for a seventh consecutive meeting in April as it maintains a wait-and-see approach amid the heightened geopolitical uncertainty.
• However, March inflation data registered the sharpest monthly increase since December 1993, taking the headline rate back above the top of the central bank’s 1-3% target range.
• While economic growth remains around its potential rate, inflation dynamics tilt the risks significantly towards a hawkish surprise this week.

In March, headline consumer prices surged by 2.38% m/m, prompting the headline rate to rise from 2.21% y/y to 3.80%, its highest level since October 2023. This was largely due to the various supply shocks the country faced last month, including the surge in global oil prices, spike in domestic gas prices after a pipeline leak and rising food prices following heavy rainfall. Of note, transport prices in Lima jumped by 9% m/m amid the increase in fuel costs, while food prices rose by another 3.2% m/m. Elsewhere, however, education prices also jumped by 2.9% due to a seasonal adjustment in tuition fees, helping to drive core consumer prices up by 2.1% m/m as well. As a result, core inflation also surged above projections to 3.65% y/y, from 2.20%, its highest level since August 2023.

Prior to the data, the central bank had said it expected inflation to rise temporarily towards the top of the 1-3% target range on the back of the energy and food price shocks, although it still saw it returning to the 2% target over the projected horizon. However, the significant upside surprise last month, especially the jump in core inflation, raises the risk of a hawkish tilt this week, potentially challenging the consensus view that the central bank will remain on hold for the foreseeable future.