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PERU: Persistent Core Inflation & PEN Depreciation May Keep BCRP on Hold

PERU
  • Peru’s central bank meet next week (July 12) and today’s inflation print might bolster the likelihood of the BCRP remaining on hold at 5.75%. As a reminder, the June statement continued to sound comfortable with the inflation outlook, but noted some persistence in core inflation, which along with recent exchange rate pressures, helped to explain the pause. 
  • Excluding food and energy, the price index rose 0.2% with transport, hospitality and miscellaneous goods and services the main drivers. The annual core CPI rate stood at 3.1%, little changed from May, and still above the ceiling of the 2.0% +/- 1 target.
  • The June BCRP statement kept the door open to further easing ahead, with the usual caveat that “future reference rate adjustments will be conditional on new information about inflation and its determinants.”
  • Combining the data with the ongoing pressure on the Peruvian sol, which has depreciated a further 2% since the June meeting, the potential for the central bank to extend its pause in the easing cycle may have increased. The one surveyed analyst so far is forecasting for this outcome.
PeruEM BulletBulletGlobalEmerging Market NewsRegion
PeruEM BulletBulletGlobalEmerging Market NewsRegion

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