- Decision
- Lower
- Rate change
- 25 bps
- reference interest rate
- 4.5%
The Board of the Central Reserve Bank of Peru (BCRP) cut the policy rate by 25 bp to 4.50 percent at its 8 May 2025 meeting, judging the new level to be close to neutral and citing a still-benign inflation backdrop and a slight softening in economic sentiment amid heightened global trade tensions that could slow disinflation abroad. After a 25 bp reduction to 4.75 percent in January followed by holds in February and March, the policy rate now stands at 4.50 percent. The BCRP set the overnight deposit rate at 2.50 percent and maintained the rate on security/currency repos and monetary regulation credits at 5.00 percent for the first ten operations in the past three months, with higher rates possible for additional transactions. April headline inflation was 0.32 percent m/m, lifting year-on-year inflation to 1.7 percent from 1.3 percent in March, while core inflation held at 1.9 percent; 12-month inflation expectations stayed at 2.3 percent, all within the 1–3 percent target range. Business confidence indicators slipped but largely remained in optimistic territory, with activity assessed near potential. Externally, deteriorating global growth prospects and persistent financial-market volatility reflect uncertainty stemming from trade restrictions, and rising trade tensions are pushing up inflation expectations in major economies, particularly the United States. The Board reiterated that any further policy moves will depend on incoming data on inflation, its drivers and economic activity, and it pledged to act as needed to keep inflation inside the target band, with the next policy review set for 12 June 2025.
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.