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BBVA on BCRP: Some Moderation Looking Forward

PERU
  • BBVA: The Bank argued that the higher inflation observed in December is a result of transitory supply factors such as the increase in the international price of food inputs and fuels, coupled with a higher exchange rate.
  • The monetary authority maintains its expectation that inflation will return to the target range (2% +/- 1%) in the second half of next year.
  • The Bank pointed out at the deterioration of expectations of domestic activity and a slower recovery of global activity, which could imply some moderation looking forward. BBVA consider that the adjustments in the monetary policy rate will continue, but the magnitude of these could moderate, especially if inflation expectations do not escalate much higher and the Fed's tapering is digested relatively well in global markets.

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