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Goldman Sachs Still Foresee 50Bp BCRP Rate Hike Next Week

PERU
  • Annual inflation declined 74bp to 5.68%, nevertheless it remains visibly above the 3.0% upper limit of the central bank’s 2% ± 1.0% inflation target band.
  • In turn, core inflation excluding food and energy registered a -0.16% mom variation, driving annual core ex-food and energy inflation down to 3.08% yoy from 3.24% yoy in December, also above the demanding 2.0% target.
  • In their assessment, going forward inflation will rise further and remain elevated with the headline print likely to peak close to 7% during 2Q2022.
  • In consequence, their view is that additional rate hikes are warranted given the challenging inflation outlook and heightened policy and political uncertainty and risk.
  • All in all, given that the policy rate is still at a low 3.00% and the ex-ante real policy rate has remained negative, additional rate hikes would still maintain an accommodative/expansionary monetary stance in coming months.
  • In consequence, despite the low monthly inflation print at this juncture GS anticipate another 50bp hike at next week’s MPC meeting, bringing the policy rate to 3.50%.
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