BCR maintains base interest rate for the second month in a row

As in February, this month the Central Reserve Bank (CRB) kept the base interest rate at 7.75%. The decision of the Board of Directors is made after 18 months of continuous growth that was interrupted in the second month of this year 2022.

However, it should be noted that, as stated in the statement, this agreement “does not necessarily mean the end of the interest rate cycle.”

“Future base rate adjustments will depend on new inflation information. and its determinants, including the macroeconomic effects of recent social events,” the document says. Recall that, according to the latest INEI report, annual inflation at the national level in February this year amounted to 8.99%..

What motivates BCR’s decision?

For the decision taken today, BCR noted that he took into account the following:

Hey. In February, the monthly inflation rate was 0.29 percent, and inflation without food and energy was 0.27 percent.. The twelve-month inflation rate declined from 8.66 percent in January to 8.65 percent in February, while the twelve-month inflation rate excluding food and energy increased from 5.80 percent in January to 5.87 percent in February. Both indicators were above the upper limit of the target inflation range.

II. A significant increase in world energy and food prices since the second half of 2021, exacerbated by international conflicts, This has led to a sharp increase in global inflation on a scale not seen for many years, and to levels well above the inflation targets set by central banks, both in advanced economies and in the region. In the case of Peru, this has been exacerbated by social conflicts since December.

III. Since March, inflation is projected to decline on an annualized basis with a return to the target range in the fourth quarter of this year., by softening the impact of world food and energy prices, reversing supply shocks in the agricultural sector, and lowering inflationary expectations for the remainder of the year; although the monthly rate is expected to be higher in March than in previous months due to short-term and seasonal factors.

IV. 12-month inflation expectations fell from 4.62 percent in January to 4.29 percent in February, above the upper end of the inflation target range. Inflationary expectation for 2023 also fell from 4.73 percent to 4.50 percent.

V. Most leading indicators and economic expectations recovered in February, although they remain in a pessimistic range.

saw. Growth prospects for global economic activity have improved somewhat, although global risk remains due to the effects of restrictive monetary policy in advanced economies, the impact of inflation on consumption, and international conflicts..

attentive

On the other hand, andl Catalog pays particular attention to new information about inflation and its determinants, including the evolution of inflation expectations and economic activity consider further changes in the position of monetary policy.

The Board of Directors confirms its commitment to take the necessary measures to ensure that inflation returns to the target range over the forecast horizon.