The Central Reserve Bank of Peru (BCRP) reported that its board of directors agreed to reduce the reference interest rate by 25 basis points to 7.25%. However, he stated that this decision does not necessarily imply a cycle of successive reductions in the interest rate. “Future adjustments in the reference rate will be conditional on new information on inflation and its determinants,” he said in a press release.
In September, the monthly inflation rate was 0.02%; For its part, inflation without food and energy was 0.13%. The twelve-month inflation rate decreased from 5.6% in August to 5.0% in September, while the twelve-month inflation rate without food and energy decreased from 3.8% in August to 3.6% in September. Both indicators have been decreasing since the beginning of 2023, but continue to be above the upper limit of the inflation target range.
The BCRP highlighted that, after the significant increase in inflation rates globally since the second half of 2021, in most countries, a decreasing trend is observed during the year. In the Peruvian case, there are temporary effects on inflation due to restrictions on the supply of certain foods, some of which have begun to dissipate since June.
Likewise, it warns that twelve-month inflation expectations remained relatively stable at 3.4%. In this way, they are close to the upper limit of the inflation target range.
The BCRP also projects that a decreasing trend in year-on-year inflation will continue and the target range will be reached at the beginning of next year. “This would be explained by the moderation of the effect of international prices of various items, the reversal of supply shocks in the agricultural sector and the projected reduction in inflation expectations. However, there are risks associated with climatic factors,” he comments.
Finally, he mentions that the growth prospects for global economic activity point towards moderation. At the same time, the global risk remains due to the effects of restrictive monetary policy in advanced economies, lower growth in China and international conflicts.
Source: Larepublica
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