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Scotiabank on BCRP Terminal Rate Forecast

  • Scotiabank’s baseline scenario has been readjusted to 7.75%, considered as the terminal rate. The latest BCRP statement poses upside risks to this forecast, but the deviation should not be too large.
  • Like them, the central bank forecasts a trend towards lower year-on-year inflation, visible from March, and maintains the expectation of an expected return to the target range during Q4 of 2023.
  • Scotiabank’s inflation forecast was revised in December from 4.00% to 4.50% for 2023, although the BCRP maintained its forecast at 3% in its December report but assigning an upward bias.
  • The BCRP sees a risk that this episode of inflation could exceed the previous record of duration (21 months, to date there are 19).

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