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JP Morgan Expect BCRP To Maintain Steady Easing Pace, With Terminal Rate Of 4% By Q4

PERU
  • JP Morgan expect the BCRP to continue trimming the policy rate with another 25bp move this week, taking the policy rate to 6.0%. Their base case is still for the policy rate to reach a terminal level for this cycle of 4.0% by the fourth quarter.
  • They note the steady 25bp per meeting easing pace that has been maintained by the BRCP has aligned with a downward trend in 12-month ahead inflation expectations. These converged to 2.64% in the latest monthly survey.
  • Thus, despite the higher February CPI print and tighter external financial conditions that put pressure on the exchange rate amid the compression of the interest rate differential, JP Morgan believe the BCRP will continue with its strategy this week.

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