2025/12/11 | Andrés Pérez M., Vittorio Peretti, Andrea Tellechea & Ignacio Martínez
At its December monetary policy meeting the Central Bank of Peru (BCRP) kept the benchmark interest rate at 4.25% for the third consecutive month. Analysts were split between a 25bp cut and a hold.
Forward guidance remained data dependent. Notably, the statement again omitted the reference indicating that the policy rate was very close to its estimated real neutral level.
The BCRP reiterated its positive inflation outlook and maintained that economic activity remains close to potential. The assessment of domestic conditions improved slightly, supported by a gradual recovery in business sentiment. The statement mentioned moderate global growth, in the context of reduced trade tensions, replacing the previous external conditions assessment that highlighted a downward bias in the medium term global economic activity.
Although not present in the statement, the BCRP resumed reserve accumulation in November, with spot dollar purchases reaching a total of USD 600 million.
Our Take: We expect headline inflation to rise moderately in the coming months reaching 1.6% by year-end. The balance of risks remains tilted to the downside, particularly if favorable exchange rate dynamics and low oil prices persist. We believe the Central Bank is in the fine tuning stage of the cycle, and is likely to cut the policy rate by 25-bps in 1Q26, ending the cycle at the nominal neutral rate of 4%. The next monetary policy meeting is scheduled forJanuary 8. The BCRP’s inflation report is to be released in the near term.