- Decision
- Lower
- Rate change
- 25 bps
- reference interest rate
- 4.25%
The Board of Directors of the Central Reserve Bank of Peru (BCRP) cut the policy rate by 25 bp to 4.25 %, taking it “very close to the estimated neutral level”, after softer headline inflation and mixed but generally optimistic activity indicators suggested inflation will stay near the 2 % midpoint of the target range. This move extends the easing cycle that began with 25 bp reductions in January and May, lowering the rate by a cumulative 50 bp from 4.75 % over the past year. The overnight deposit rate was set at 2.25 %, while security/currency repo and rediscount operations will carry 4.75 % for the first ten operations in the last three months, with higher rates possible thereafter. August headline inflation fell 0.29 % m/m and to 1.1 % y/y, while core inflation crept up to 1.8 %; one-year-ahead inflation expectations held at 2.2 %, and activity remains around potential as most current-situation indicators firmed. Externally, the Bank again warned that global growth prospects are clouded by restrictive trade measures and elevated uncertainty. The Board reiterated its readiness to adjust the stance should incoming data on inflation, expectations or activity warrant it and will review policy on 9 October 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.