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PERU: Analysts Expecting BCRP Cut Next Week Following Inflation Data

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  • Despite the above-expectation headline prints for headline inflation, it is important to note that core inflation fell within the BCRP’s target band for the first time since January. As such, analysts appear to be tilting towards the BCRP choosing to cut the reference rate again next week, having restarted the easing cycle in August.
  • **Itaú: Given the emphasis that the BCRP statements have given to core inflation, Itaú believe that the central bank will cut in the September meeting to 5.25%, also responding to below trend economic activity (although recovering) and headline inflation within the target range for five consecutive months. Itaú expect the BCRP to end the year at 5.00%.
  • **BBVA: With CPI (headline and core) and inflation expectations within the target range, and with markets anticipating that the FED will ease, the most likely scenario is that the central bank will cut rates next week. The bank expects the BCRP to cut by 25bps to 5.25%, if exchange rate pressures remain limited. BBVA do note that in Q4, however, the y/y comparison base will be unfavourable, so, although inflation will end the year within the target range, BBVA continue to forecast that it will do so somewhat above 2.5% y/y.
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  • Despite the above-expectation headline prints for headline inflation, it is important to note that core inflation fell within the BCRP’s target band for the first time since January. As such, analysts appear to be tilting towards the BCRP choosing to cut the reference rate again next week, having restarted the easing cycle in August.
  • **Itaú: Given the emphasis that the BCRP statements have given to core inflation, Itaú believe that the central bank will cut in the September meeting to 5.25%, also responding to below trend economic activity (although recovering) and headline inflation within the target range for five consecutive months. Itaú expect the BCRP to end the year at 5.00%.
  • **BBVA: With CPI (headline and core) and inflation expectations within the target range, and with markets anticipating that the FED will ease, the most likely scenario is that the central bank will cut rates next week. The bank expects the BCRP to cut by 25bps to 5.25%, if exchange rate pressures remain limited. BBVA do note that in Q4, however, the y/y comparison base will be unfavourable, so, although inflation will end the year within the target range, BBVA continue to forecast that it will do so somewhat above 2.5% y/y.