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PERU: Soft Jan CPI Inflation Keeps Door Open To Feb Rate Cut, New FinMin

PERU
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  • CPI inflation came in below expectations again over the weekend, with headline prices falling by 0.09% m/m in January, below the +0.04% consensus. As a result, the annual rate of inflation fell further, to 1.85% y/y, from 1.97%, below the 2.00% consensus. Meanwhile, core prices fell by 0.15% m/m, bringing the annual rate of core inflation down to 2.43% y/y, from 2.60%. Services inflation also fell by 29bp to 2.8% y/y, the lowest level since 2019.
  • Goldman Sachs says that the reading opens the door for the MPC to deliver a final rate cut at the Feb 13 meeting, although the ultimate decision will also likely be influenced by the exchange rate dynamics and the ongoing global trade tensions. In contrast, JP Morgan expects the BCRP to stand pat at 4.75% in February amid heightened external uncertainty, but maintains 4.25% as the policy rate consistent with neutral.
  • Separately, Jose Salardi was sworn in as the country’s new Finance Minister on Friday night, replacing Jose Arista. President Boluarte released a statement late on Friday, stating that the government would make Cabinet changes, which included the ministry of women and vulnerable populations and the ministry of social inclusion.
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  • CPI inflation came in below expectations again over the weekend, with headline prices falling by 0.09% m/m in January, below the +0.04% consensus. As a result, the annual rate of inflation fell further, to 1.85% y/y, from 1.97%, below the 2.00% consensus. Meanwhile, core prices fell by 0.15% m/m, bringing the annual rate of core inflation down to 2.43% y/y, from 2.60%. Services inflation also fell by 29bp to 2.8% y/y, the lowest level since 2019.
  • Goldman Sachs says that the reading opens the door for the MPC to deliver a final rate cut at the Feb 13 meeting, although the ultimate decision will also likely be influenced by the exchange rate dynamics and the ongoing global trade tensions. In contrast, JP Morgan expects the BCRP to stand pat at 4.75% in February amid heightened external uncertainty, but maintains 4.25% as the policy rate consistent with neutral.
  • Separately, Jose Salardi was sworn in as the country’s new Finance Minister on Friday night, replacing Jose Arista. President Boluarte released a statement late on Friday, stating that the government would make Cabinet changes, which included the ministry of women and vulnerable populations and the ministry of social inclusion.