2025/10/10 | Andrés Pérez M., Vittorio Peretti, Andrea Tellechea & Ignacio Martínez
At its October monetary policy meeting, the Central Reserve Bank of Peru (BCRP) voted to keep the benchmark interest rate at 4.25%. This decision followed a 25-basis-point cut in September and was fully in line with market expectations. Forward guidance remains data-dependent. Notably, the statement omitted the previous reference indicating that the policy rate was very close to its estimated real neutral level. However, the ex-ante real interest rate remains stable at 2.1%, only marginally above the estimated neutral rate of 2.0%.
The BCRP reiterated its positive inflation outlook and maintained that economic activity remains close to its potential. The assessment of domestic conditions improved slightly, supported by a gradual recovery in business sentiment. The Board still highlights the downside risks to global growth but softened its tone by omitting the reference to elevated external uncertainty affecting external demand.
Our Take: We believe that the Central Bank will continue progressing toward a nominal neutral policy rate of 4%. However, with the output gap largely closed, the policy stance only slightly restrictive, and rising short-term political uncertainty, there is no urgency to implement the final cut. The next monetary policy meeting is scheduled for November 13.
