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PERU: BBVA Expects 25bp BCRP Rate Cut Today, Little Impact On PEN

PERU
PeruEM BulletBulletGlobalEmerging Market NewsRegion
  • BBVA thinks that the BCRP is likely to cut rates by 25bp today, although consensus is split equally between a hold and a 25bp cut. The risk is that the BCRP holds, continuing its pause as it allows adverse base effects in 4Q to pass.
  • These transitory effects were used as the rationale for the BCRP to pause at its recent meetings, but since then the data have shown a continued consolidation lower of core inflation to 2.5% y/y.
  • While the implications of the US election result are likely a consideration, the impact is difficult to quantify, and the BCRP considers it more of a medium-term issue, choosing to look past it in its short-term policymaking. At the end of the day, a 25bp cut or pause will not have a massive impact on the PEN.
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  • BBVA thinks that the BCRP is likely to cut rates by 25bp today, although consensus is split equally between a hold and a 25bp cut. The risk is that the BCRP holds, continuing its pause as it allows adverse base effects in 4Q to pass.
  • These transitory effects were used as the rationale for the BCRP to pause at its recent meetings, but since then the data have shown a continued consolidation lower of core inflation to 2.5% y/y.
  • While the implications of the US election result are likely a consideration, the impact is difficult to quantify, and the BCRP considers it more of a medium-term issue, choosing to look past it in its short-term policymaking. At the end of the day, a 25bp cut or pause will not have a massive impact on the PEN.