- Decision
- Lower
- Rate change
- 25 bps
- reference interest rate
- 4.75%
The Board of the Central Reserve Bank of Peru cut the policy rate by 25 bp to 4.75 % at its 9 January 2025 meeting, saying the reduction brings the rate closer to the estimated neutral level and is justified by headline inflation falling to 2.0 % y/y in December—mid-point of the 1–3 % target range—while core inflation held at 2.6 %. After leaving the rate unchanged at 4.25 % in its previous January 2026 Programme, the Board has now moved policy 50 bp higher over the period. To implement the stance it set the overnight deposit rate at 2.75 % and kept lending operations at 5.25 % for the first ten transactions in the last three months, with higher rates possible for additional operations. Twelve-month inflation expectations stayed just below 2.5 %, activity indicators softened in December but remain in the optimistic zone with output near potential, and the Bank foresees both headline and core inflation remaining inside the target range over the forecast horizon. Externally, it notes prospects for moderate global growth amid the gradual normalisation of advanced-economy monetary policy and persistent risks from international conflicts and trade policy uncertainty. The Board will stay “especially attentive” to new data on inflation, expectations and activity and signalled that further policy adjustments will depend on upcoming information to ensure inflation remains within target.
Rate evolution
Over the period, the Central Reserve Bank of Peru held the reference rate at 4.50% in July 2025, lowered it by 25 basis points to 4.25% in September 2025 after several months on hold, and kept it unchanged through September 2026. The early pause reflected headline inflation and inflation without food and energy of 1.7% in June 2025, one-year-ahead inflation expectations of 2.3% within the target range, and activity around potential, while the September cut followed a temporary fall in headline inflation and the Board’s assessment that the rate was close to neutral.
At its June 11, 2026 meeting, the Board held the reference rate at 4.25%, noting that annual headline inflation eased to 3.9% in May, and on July 9 it again left the rate unchanged as headline inflation rose to 4.0% in June and inflation without food and energy to 4.5%, while expectations fell to 2.8% and activity indicators continued to perform well. In August, the Board maintained the rate as annual headline inflation increased to 4.1% in July, inflation without food and energy reached 4.6%, and 12-month inflation expectations rose to 3.0%, the upper limit of the target range. On September 10, it again held the rate at 4.25% as annual headline inflation rose to 4.4% in August, mainly because of a base effect, while inflation without food and energy declined to 4.5% and 12-month expectations increased to 3.1%, slightly above the target range. The Board projected both inflation measures would return to the target range and settle around 2% as supply-shock effects dissipated, but flagged risks from a more persistent El Niño and Middle East tensions and said it remained attentive to inflation, expectations, activity and the duration of supply shocks.