BCRP reduced its reference interest rate: will the cost of credit also decrease?

After 40 months, the Central Reserve Bank of Peru (BCRP) reduced its reference interest rate by 25 basis points to 7.50% due to the slowdown in inflation, which in August had an annual rate of 5.58% . However, this decision would have an impact on the credits offered by the entities of the financial system, according to specialists.

Will interest rates on loans go down?

Since the BCRP rate is a reference for financial entities, Active interest rates (charged by banks) and passive interest rates (paid to savers) are expected to begin to fall in the coming months.

For Jorge Guillén, Professor of Finance at ESAN Graduate School of Business, the first rates that would begin to drop are those offered by banks, municipal and financial savings banks to their clients for depositing their savings. Thus, he adds that one of the products that would be most affected is time deposits, which had a profitability of up to 9%, but which is expected to begin to decline due to the BCRP decision.

“Passive rates are the first to drop because they have been quite high. (Fixed deposit rates) were around 9% and could be 7% or 5%. These are faster (in going down), it would be in a month or so,” Guillén commented for La República.

For his part, the economist and CEO of Washington Capital, Washington López, indicates that there will be a reduction in interest rates on Credit cards and in mortgage loans in soles.

Jorge Guillén also agrees with this, although he warns thatThe reduction in rates on mortgage, consumer and revolving loans takes longer and could take up to six months to see a decline.

“When (the adjustment to the Reference rate) is upward, it moves immediately, but downward it takes longer. It will be slower and will probably be gradually decreasing and will take three to six months. Maybe in summer, when the El Niño phenomenon comes, we will feel it with a drop,” said the professor at ESAN Graduate School of Business.