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PERU: Analysts Expecting BCRP Cut Next Week Following Inflation Data

PERU
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  • The 0.24% m/m decline in the headline CPI in September brought annual inflation to its lowest level since October 2020. As such, analysts appear to be tilting towards the BCRP delivering another cut in the reference rate next week.
    • JP Morgan: monthly core inflation has shown no variation in the last two months, and the 3-month annualised rate has converged below the target ceiling. JPM thus maintain their call for a 25bp to 5.0% next week. In their central scenario, the policy rate converges to 4.5% by year-end, with a terminal level of 4.0% by 2Q25.
    • Goldman Sachs: core price pressures remained soft and their estimate for services inflation tracked at -0.03% m/m. On an annual basis, core inflation reached its lowest level since Sept 2021, and services fell by 20bp to 3.0%. GS believes the benign reading significantly increases the probability of a follow-up 25bp cut next week.
    • Itaú: The disinflation process continues, supported in September by an unexpected decline in volatile food staples that is likely to revert. Given the emphasis that the BCRP have given to core inflation, Itaú believes that the BCRP will continue easing this year to 5.0%, with risks leaning towards more cuts and a faster decline next year to neutral (4.0%).
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  • The 0.24% m/m decline in the headline CPI in September brought annual inflation to its lowest level since October 2020. As such, analysts appear to be tilting towards the BCRP delivering another cut in the reference rate next week.
    • JP Morgan: monthly core inflation has shown no variation in the last two months, and the 3-month annualised rate has converged below the target ceiling. JPM thus maintain their call for a 25bp to 5.0% next week. In their central scenario, the policy rate converges to 4.5% by year-end, with a terminal level of 4.0% by 2Q25.
    • Goldman Sachs: core price pressures remained soft and their estimate for services inflation tracked at -0.03% m/m. On an annual basis, core inflation reached its lowest level since Sept 2021, and services fell by 20bp to 3.0%. GS believes the benign reading significantly increases the probability of a follow-up 25bp cut next week.
    • Itaú: The disinflation process continues, supported in September by an unexpected decline in volatile food staples that is likely to revert. Given the emphasis that the BCRP have given to core inflation, Itaú believes that the BCRP will continue easing this year to 5.0%, with risks leaning towards more cuts and a faster decline next year to neutral (4.0%).