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PERU: JP Morgan Expect BCRP To Cut by 25bp In Both November And December

PERU
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  • JP Morgan had expected another 25bp cut yesterday, mainly due to the fact that inflation converged below the 2% target. Despite this unexpected pause, they still see additional easing ahead. In their view, despite the firmer activity performance, there is still slack in the system. In fact, the output gap is recognised by the BCRP, as it gauges the deviation from potential at -0.4% of GDP this year. On inflation, JPM’s base case is for headline and core CPI to close the year at 2.3% and 2.6%, respectively.
  • Looking ahead, JPM’s base case includes additional easing, with 25bp cuts to come in both November and December. This assumes stable external financial conditions following the US election results and oil prices around US$80 per barrel this quarter. JPM now projects the policy rate at 4.75% by December, and a terminal level at 4.0% by 2Q25.
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  • JP Morgan had expected another 25bp cut yesterday, mainly due to the fact that inflation converged below the 2% target. Despite this unexpected pause, they still see additional easing ahead. In their view, despite the firmer activity performance, there is still slack in the system. In fact, the output gap is recognised by the BCRP, as it gauges the deviation from potential at -0.4% of GDP this year. On inflation, JPM’s base case is for headline and core CPI to close the year at 2.3% and 2.6%, respectively.
  • Looking ahead, JPM’s base case includes additional easing, with 25bp cuts to come in both November and December. This assumes stable external financial conditions following the US election results and oil prices around US$80 per barrel this quarter. JPM now projects the policy rate at 4.75% by December, and a terminal level at 4.0% by 2Q25.