The board of directors of the Banco Central de Reserva del Perú (BCRP) announced on April 9 that it has decided to keep the reference interest rate unchanged at 4.25 percent.
This decision is significant as it comes amid recent increases in inflation and ongoing global economic risks, which affect both local and international markets.
According to the BCRP, inflation in March reached a monthly rate of 2.38 percent, while core inflation excluding food and energy stood at 2.07 percent. The rise was attributed to several supply shocks including higher international fuel prices, a temporary halt in natural gas supply during the first half of March, and adverse weather conditions. Year-over-year, total inflation rose from 2.2 percent in February to 3.8 percent in March, with core inflation increasing from 2.2 to 3.7 percent over the same period—both now above the central bank’s target range.
Twelve-month inflation expectations also climbed from 2.1 percent in February to 2.5 percent in March but remain within target levels set by the bank’s monetary policy framework. The BCRP projects that both headline and core annual inflation will return to target by year-end as supply shocks subside and are expected to settle around two percent by 2027.
The central bank said economic activity remains close to its potential level with most current situation indicators remaining optimistic through March despite elevated global risks stemming from conflict in the Middle East leading to greater financial market volatility and higher oil prices.
“The board remains especially attentive to new information about inflation and its determinants—including underlying trends, expectations for future price growth, economic activity levels, and how long supply shocks last—in order to assess whether adjustments are needed for monetary policy,” according to a statement issued after their session.
In addition, overnight deposit rates were set at an annual rate of 2.25 percent while certain direct repo operations will carry an annual rate of up to 4.75 percent for initial transactions within three months; further terms may be determined by the Monetary Operations Committee based on transaction volume.
The next board meeting where monetary policy will be reviewed is scheduled for May 14.
As Peru’s central bank since its establishment in 1922, BCRP operates as an autonomous public law entity drawing authority from Peru’s Constitution and Organic Law according to its official website. It manages currency issuance, oversees international reserves, supports financial system stability through regulation, promotes cultural engagement via its Museo Central network offering educational programs according to the official website, serves communities across Peru through regional offices according to the official website, operates under a seven-member board led by its president according to the official website, and safeguards national monetary stability according to the official website.
