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Analyst Notes On Peru Inflation Data/BCRP Policy

PERU
  • **Goldman Sachs: Despite the favorable headline inflation surprise, GS highlight that core and several services inflation remained high (they expect inflation to close 2022 at ≈8%). This and further tightening of global monetary conditions are expected to prompt the central bank to maintain a restrictive monetary policy stance over the relevant policy horizon.
  • **JPMorgan: Following the Oct CPI report, Dec-2022 headline CPI forecast is maintained at 7.6%oya. The level is consistent with headline inflation decelerating to 0.25% monthly average in the last two months of the year, as compared to 0.68% m/m in Jan-Oct 2022. For 2023 inflation is expected to maintain a downward trend, converging to 3.8%oya by December and 5.2% on average for the year.
    • In terms of monetary policy, despite the deceleration observed in both headline and expected inflation, JPM find merit in the BCRP hiking the policy rate again by 25bp next week. If so, the policy rate level would reach 7.25%, in what could be the last hike of the current cycle.
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  • **Goldman Sachs: Despite the favorable headline inflation surprise, GS highlight that core and several services inflation remained high (they expect inflation to close 2022 at ≈8%). This and further tightening of global monetary conditions are expected to prompt the central bank to maintain a restrictive monetary policy stance over the relevant policy horizon.
  • **JPMorgan: Following the Oct CPI report, Dec-2022 headline CPI forecast is maintained at 7.6%oya. The level is consistent with headline inflation decelerating to 0.25% monthly average in the last two months of the year, as compared to 0.68% m/m in Jan-Oct 2022. For 2023 inflation is expected to maintain a downward trend, converging to 3.8%oya by December and 5.2% on average for the year.
    • In terms of monetary policy, despite the deceleration observed in both headline and expected inflation, JPM find merit in the BCRP hiking the policy rate again by 25bp next week. If so, the policy rate level would reach 7.25%, in what could be the last hike of the current cycle.