The Board of the Banco Central de Reserva del Perú (BCRP) decided on March 13 to maintain its benchmark interest rate at 4.25 percent.
This decision is significant as it reflects the central bank’s ongoing approach to monetary policy amid recent economic developments and inflation trends. The reference rate has remained the lowest among major countries in the region since 2020, according to data provided by BCRP.
Recent figures show that Peru’s monthly inflation rate was 0.69 percent in February, with core inflation—excluding food and energy—at 0.36 percent. The increase in overall inflation for the month was mainly due to higher water tariffs and supply-driven rises in some food prices. Over twelve months, headline inflation rose from 1.7 percent in January to 2.2 percent in February, while core inflation also increased from 2.0 to 2.2 percent during the same period.
Inflation expectations for the next twelve months edged up slightly, moving from 2.0 percent in January to around 2.1 percent in February, remaining close to the center of BCRP’s target range for inflation.
Economic activity continues near its potential level, with leading indicators through February showing positive performance across several sectors such as internal value-added tax collection and cement consumption. However, most current situation and expectation indicators saw a decrease during the month but stayed within optimistic territory.
The formal labor market has shown strong growth since last year, with both private formal employment and wage mass increasing steadily.
Globally, risk has risen due to conflict in the Middle East, resulting in greater financial market volatility and higher international oil prices. Despite these challenges, global economic growth prospects remain positive for this year and terms of trade continue to be favorable for Peru’s economy.
Looking ahead, annual inflation and core inflation are projected to stay around two percent over the forecast horizon. However, temporary factors such as climate events, rising international energy prices, and disruptions in natural gas supply may push inflation into the upper part of BCRP’s target range over coming months.
The Board stated it remains attentive to new information regarding inflation and its determinants—including underlying inflation trends, expectations, and economic activity—to consider any necessary changes to monetary policy stance if required.
