Peru: The central bank to remain on hold again this week

Peru: The central bank to remain on hold again this week

PERU

The long pause to continue this week. The central bank (BCRP) has kept the policy rate unchanged for 18 consecutive months. We expect this to continue this week and into next year.

Inflation has been above target on temporary effects of supply shocks, but has begun falling toward the 2.0%±1.0pp range recently. The economy is growing at a trend pace (6.5% y/y in Q3) on robust domestic demand but concerns about external conditions persist.

Under these conditions, the BCRP is likely to remain on hold. Looking forward, we expect a 50bp cumulative hike in the policy rate.