MNI China Daily Summary: Friday, January 10

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PERU: BCRP Cuts By 25bp, Keeps Door Open To Further Easing

PERU
BulletPeruEM BulletEmerging Market News
  • The BCRP resumed its easing cycle with a 25bp cut in its reference rate to 4.75%, in line with the majority of analyst expectations. However, a significant minority of analysts had expected no change. In the accompanying statement the Board indicated that it remains in a data dependent mode, keeping the door open to a further policy rate cut ahead.
  • The Board noted that with this decision, the policy rate is approaching its neutral level. On inflation, both the headline and core measures are still expected to remain within the target range over the forecast horizon, while inflation expectations also remain within target. On activity, the committee reiterated that the majority of indicators are within “optimistic” territory, despite deteriorating in December, and economic activity is still around its potential level.
  • In terms of the outlook, the statement notes the risks stemming from uncertainty about global trade policies. Overall, the committee reiterates that future rate adjustments will depend on new information about inflation, with particular interest on core inflation, inflation expectations and economic activity. Analysts mostly see scope for one to two additional 25bp rate cuts in the meetings ahead to around a neutral level. The next MPC meeting is on February 13.
    • Link to BCRP policy statement here. 
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  • The BCRP resumed its easing cycle with a 25bp cut in its reference rate to 4.75%, in line with the majority of analyst expectations. However, a significant minority of analysts had expected no change. In the accompanying statement the Board indicated that it remains in a data dependent mode, keeping the door open to a further policy rate cut ahead.
  • The Board noted that with this decision, the policy rate is approaching its neutral level. On inflation, both the headline and core measures are still expected to remain within the target range over the forecast horizon, while inflation expectations also remain within target. On activity, the committee reiterated that the majority of indicators are within “optimistic” territory, despite deteriorating in December, and economic activity is still around its potential level.
  • In terms of the outlook, the statement notes the risks stemming from uncertainty about global trade policies. Overall, the committee reiterates that future rate adjustments will depend on new information about inflation, with particular interest on core inflation, inflation expectations and economic activity. Analysts mostly see scope for one to two additional 25bp rate cuts in the meetings ahead to around a neutral level. The next MPC meeting is on February 13.
    • Link to BCRP policy statement here.