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Natixis: Year-End Rate Forecast of 3.75%, Probability of Larger Cuts Increasing

PERU
  • It appears that inflation has been decelerating faster than predicted by the BCRP. Importantly, all subcomponents of the index showed moderated inflation in January except for other services which accelerated by 0.28% M/m. In general, Natixis have seen this dynamic in several countries in the region and the US, with goods inflation continuing to fall but services inflation remaining sticky.
  • On growth, Natixis forecast a contraction of 0.5% Y/y in 2023 and then for the economy to recover in 2024.
  • Natixis acknowledge that the probability of the BCRP accelerating the pace of cuts – to 50bp per meeting – is increasing. For the time being, however, they continue to forecast 25bp cuts over the next few meetings. Natixis forecast the policy rate at 3.75% by year-end.

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