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JPMorgan: Policy Rate Expected To Converge To 6.25% By December

PERU
  • Following the communication tweaks that accompanied the decision to maintain stable the policy rate last month, and against the backdrop of growth revisions lower and lack of evidence of demand side CPI pressures, JPMorgan continue to see room for the Board to start easing monetary conditions this month.
  • Even if the next 12-m inflation expectations have not converged within the target as of yet, maintaining the nominal policy rate for longer would drive the real ex-ante rate higher. A de-facto tighter monetary stance would prove more an additional headwind to activity, amid slack.
  • JPMorgan, thus, expect a first policy rate cut for this month, for -25bp. The policy rate is expected to converge to 6.25% by December..

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