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Goldman Sachs Expect Another BCRP 50bp Hike To 5.50%

PERU

Goldman Sachs on Thursday’s BCRP Decision

  • Goldman Sachs expect the MPC to deliver another 50bp hike, driving the policy rate to 5.50%. This would be the eleventh rate increase this cycle and tenth consecutive 50bp hike.
  • All in all, in their assessment, the outlook for inflation remains challenging and inflation expectations have deteriorated further. In the May central bank’s survey, economists’ inflation expectations for end-2022 and end-2023 rose by +50bp and +60bp, each to 6.0% and 3.8%, respectively.
  • Additionally, political uncertainty and risk remain significant and the sizeable increase in the minimum wage and another round of pension fund withdrawals could increase inflationary pressures.
  • Furthermore, the fact that the real ex-ante policy rate remains low, given the rise in inflation expectations, support the case for continued rate hikes in future meetings.
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Goldman Sachs on Thursday’s BCRP Decision

  • Goldman Sachs expect the MPC to deliver another 50bp hike, driving the policy rate to 5.50%. This would be the eleventh rate increase this cycle and tenth consecutive 50bp hike.
  • All in all, in their assessment, the outlook for inflation remains challenging and inflation expectations have deteriorated further. In the May central bank’s survey, economists’ inflation expectations for end-2022 and end-2023 rose by +50bp and +60bp, each to 6.0% and 3.8%, respectively.
  • Additionally, political uncertainty and risk remain significant and the sizeable increase in the minimum wage and another round of pension fund withdrawals could increase inflationary pressures.
  • Furthermore, the fact that the real ex-ante policy rate remains low, given the rise in inflation expectations, support the case for continued rate hikes in future meetings.