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Peru: Central Bank to Tighten Further
By Bertrand Delgado
RGE expects the central bank to hike the reference rate by 25 bps to 3.5% given that the economy continues to grow robustly and above potential and inflation is moving higher, although mostly due to pressures stemming from higher food and energy prices. However, there is a slight probability that the central bank might stay on hold given strong appreciating pressures on the currency and still limited demand-pull inflation pressures.
Figure 1: Peruvian Inflation (% y/y), Target Range and Monetary Policy Rate (forecast in box)
Source: INEI, BCRP and RGE