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JPMorgan On BCRP: 4.25% Rate By Q3 2022

PERU
  • JPMorgan: As commented in prior months, a key factor behind the realized and expected inflation acceleration observed in 2H21 has been the exchange rate dynamic, with the local currency undershooting on heightened risk and uncertainty associated with the political and institutional agenda of the Castillo administration. That said, inflation is expected to print persistently above target, with 2022 forecast at 3.5% as per the BCRP survey (J.P. Morgan 3.7%).
  • In summary, the above-target-range inflation expectations level calls for additional monetary impulse reduction ahead. JPM expect the policy rate to reach 4.25% by 3Q22, driving the ex-post and ex-ante real rates close to the 2011-19 average level.

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