BCRP cuts the reference rate to 6.50% for the fifth consecutive month

The Board of Directors of the Central Reserve Bank of Peru (BCRP) agreed to lower the reference interest rate by 25 basis points to 6.50%, a cut that began in September 2023. On this occasion, the entity specified that they took into account that the twelve-month inflation rate was reduced from 3.6% in November to 3.2% in December. While inflation without food and energy decreased from 3.1% to 2.9%, that is, it is already in the target range.

The entity specified that this decision does not necessarily imply a cycle of successive reductions, since future adjustments in the reference rate will be conditional on new information about inflation and its determinants. Although they expect that in the coming months year-on-year inflation will reach the objective (between 1% and 3%), this will be subject to the impacts of the El Niño phenomenonand at a global level, to the development of international conflicts and lower growth in China.

“After the significant increase in inflation rates globally since the second half of 2021, a decreasing trend is observed in most countries. In the Peruvian case, the decrease has been more marked between June and December 2023, as some of the transitory effects on inflation due to restrictions on the supply of certain foods have dissipated”detailed the BCRP.

For his part, the economist and director of Phase Consultores, Juan Carlos Odar, highlighted that with the January reduction made by the BCRP there are already 5 consecutive months of decline of the same magnitude. In this way the rate returns to the level of August 2022. “If there were symmetry between rise and fall, the next cut would be 50 basis points. But I think that will be in March,” he commented.

It should be noted that the next session of the Board of Directors in which the Monetary Program will be evaluated is scheduled for Thursday, February 8, 2024.