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- They don't expect the BCRP Board to signal any substantial change in its monetary policy settings in its communications following the June 10 meeting.
- Members appear to be focused on the fact that core inflation remains just below the 2% y/y headline inflation target, which the Board views as a by-product of output gaps that are likely to persist into next year.
- Becoming a bit more sceptical that price pressure will prove quite as transitory as the BCRP currently forecasts: Scotiabank Economics in Peru has raised its end-2021 projection from 2.6% y/y to the top of the target range at 3.0% y/y, and shifted up its end-2022 forecast from 2.3% y/y to 2.6% y/y.
- In all, core inflation remains well below the demanding 2% target and the clear guidance has been for stable policy rate for an extended period.
- A high number of new Covid cases will continue to impart a negative bias on short-term activity.
- They expect the MPC to keep the rate at 0.25% through at least late 2021, and to start normalizing monetary policy only when the level of activity is on a sustainable recovery path approaching pre-pandemic levels.