- Decision
- Maintain
- Rate change
- 0 bps
- reference rate
- 4.25%
The Central Reserve Bank of Peru (BCRP) held its reference rate at 4.25% in August, citing above-target inflation driven mainly by earlier fuel and transport-cost shocks, resilient economic activity and expectations that supply effects will dissipate. The rate has remained at 4.25% since a 25-basis-point cut from 4.50% in September 2025. The BCRP maintained its overnight deposit rate at 2.25% and the rate on the first 10 direct repo and monetary regulation credit operations over three months at 4.75%. Year-on-year headline inflation rose to 4.1% in July, while 12-month inflation expectations reached 3.0%, the upper limit of the target range, but headline inflation and inflation excluding food and energy are projected to return to the range and settle around 2% over the forecast horizon. Leading activity indicators remained strong in July, with all surveyed expectations measures in optimistic territory. Global risks moderated as hydrocarbon supplies relatively normalized, although geopolitical and trade uncertainty persists, while the global growth outlook and Peru’s terms of trade remain favorable. The BCRP said it will monitor inflation, underlying inflation, expectations, activity and the duration of supply shocks and adjust the monetary stance if necessary.
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.