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MNI Peru Central Bank Review - May 2024: Easing Cycle Continues

MNI Peru Central Bank Review – May 2024

MNI Peru Central Bank Review – May 2024

Executive Summary

  • Peru’s central bank cut its reference rate by 25bp to 5.75%, in line with the majority of analyst expectations.
  • The board continued to sound comfortable with the inflation outlook, keeping the door open to further rate cuts ahead. The statement provided the usual caveat that “future rate adjustments will be conditional on new information about inflation and its determinants.”
  • Most analysts expect rate cuts to continue in the coming meetings, potentially with some pauses along the way.

See the full MNI Review, with a summary of sell-side analyst views, here:

MNI Peru Central Bank Review - May 2024.pdf

Looking ahead, the board will remain “particularly attentive to new information on inflation and its determinants”, adding that this will include the evolution of core inflation. Some analysts see this as potentially opening the door to pauses in the easing cycle, given that core inflation may decline more slowly. Declining interest rate differentials with the US, and the potential impact on the FX, could also impact the pace of easing going forward. Forecasts for the year-end policy rate sit mostly in the 4.75%-5% range.

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