The reference interest rate of Central Reserve Bank of Peru (BCRP) Today it registers the lowest level – located at 6.50% – compared to the main economies of Latin America since the beginning of COVID-19, according to the entity. The last update of this indicator was made on Thursday, January 11, confirming 5 consecutive cuts in line with the decline in inflation and lower inflation expectations.
Along these lines, the BCRP’s real interest rate, which results from the difference in the nominal interest rate minus 12-month inflation expectations, was reduced to 3.67% in January, also being the lowest of the main economies of the region.
Meanwhile, inflation expectations for the next 12 months have returned to the target range at the end of last year, standing at 2.83%, the lowest in 30 months. That is the lowest rate since June 2021.
While as of January 12, Chile has a rate of 8.25%, followed by Mexico (11.25%), Brazil (11.75%) and Colombia (13%).
What is the reference interest rate?
Every month the BCRP makes decisions about the monetary policy interest rate or reference rate. The objective is to keep inflation within the target range, currently set between 1% and 3%. The adjustments made to this indicator are transmitted to the interest rates of the interbank market (interbank interest rate and market instrument rates) and the banking market (such as loan and deposit rates), which affects the spending decisions of companies and families, as well as aggregate demand and finally inflation, explains the entity.
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.
Source: Larepublica
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