At its November 10 meeting, the Central Bank of Peru raised the base rate by 25 basis points to 7.25%, bringing the cumulative increase for the year to 475 basis points.
The Bank continued to raise interest rates to curb rising inflation and lower inflation expectations, both of which remain well above the 1.0-3.0% target range. Inflation fell to 8.3% in October from 8.5% in September, while inflation expectations over the next 12 months moderated from 4.9% to 4.8%. However, the Bank sees inflation returning to the target range of 1.0-3.0% in the second half of 2023 amid lower international food and energy prices.
The bank affirmed its readiness to take additional steps to ensure that inflation returns to the target level. However, committee members expect interest rates to fall in 2023 as inflation also moderates thanks to the lagging effect of previous interest rate increases.
The next meeting is scheduled for December 7.
The LatinFocus panel sees the monetary policy rate ending in 2023 at 5.71% and 2024 at 4.38%.