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PERU: BCRP Cuts By 25bp, But Signals Possible Pause Ahead

PERU
PeruEM BulletBulletGlobalEmerging Market NewsRegion
  • The BCRP cut its reference rate by 25bp last night to 5.00%, a decision which had been anticipated by a narrow majority of analysts in the latest Bloomberg survey. The remaining analysts had expected the policy rate to remain unchanged.
  • The accompanying policy statement struck a more hawkish tone, with the central bank saying that with this decision the real interest rate is approaching the level estimated as neutral. It also noted that this move does not necessarily imply successive interest rate cuts, signalling a potential pause ahead. The next MPC meeting is on Dec 12.
  • The board expects headline and core inflation to remain within target over the forecast horizon, although it anticipates a slight temporary rise in y/y inflation in Nov/Dec due to base effects. The balance of risks also noted uncertainty about Chinese growth. Analysts expect the BCRP to proceed with a slower pace of rate cuts ahead, with the terminal rate in a 4.25-4.75% range.
    • Link to BCRP policy statement here. 
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  • The BCRP cut its reference rate by 25bp last night to 5.00%, a decision which had been anticipated by a narrow majority of analysts in the latest Bloomberg survey. The remaining analysts had expected the policy rate to remain unchanged.
  • The accompanying policy statement struck a more hawkish tone, with the central bank saying that with this decision the real interest rate is approaching the level estimated as neutral. It also noted that this move does not necessarily imply successive interest rate cuts, signalling a potential pause ahead. The next MPC meeting is on Dec 12.
  • The board expects headline and core inflation to remain within target over the forecast horizon, although it anticipates a slight temporary rise in y/y inflation in Nov/Dec due to base effects. The balance of risks also noted uncertainty about Chinese growth. Analysts expect the BCRP to proceed with a slower pace of rate cuts ahead, with the terminal rate in a 4.25-4.75% range.
    • Link to BCRP policy statement here.