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Substantial Rise In CPI Ahead of BCRP January Meeting

  • December Lima CPI, released on January 01, came in well ahead of the prior readings at 0.78% m/m and 6.43% Y/y compared to 5.66% in November.
  • The readings place further pressure on the central bank to continue with their monetary tightening cycle tomorrow, in order to anchor medium-term expectations.
  • Relieving the pressure slightly, the currency has appreciated roughly 3% since the December meeting, outperforming most peers. However, political uncertainty remains high and, along with tightening external financial conditions and risk of capital outflows, warrants caution.
  • Of the five surveyed analysts on Bloomberg, all five are calling for another 50bp increase to the reference rate to 3.00%.

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