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Itaú Says Balance Tilted Towards Another 25bp Cut Next Week

PERU
  • Itaú continue to cite increasing uncertainty surrounding the start of Fed’s easing cycle as posing challenges for EM easing cycles. They specifically note the BCRP due to the low interest rate differentials, ahead of the May decision next Thursday.
  • However, Itaú believe April’s benign inflation figure, in the context of a weak recovery in economic activity, increases the odds for another policy rate cut or another reserve requirement adjustment.
  • Itaú think the balance is now slightly biased for another rate cut of 25-bp in May (reaching a level of 5.75%). Twelve-month inflation expectations and global financial conditions for the month of April, to be published today, will be an important additional determinant for the next monetary policy decision.

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