- Peru: The BCRP ends 2025 with its policy rate at 4.25%
The Board of the Central Reserve Bank of Peru (BCRP) has decided to keep its benchmark interest rate unchanged at 4.25% in December, marking the third consecutive month without changes. This decision was in line with our expectations and market consensus (as reflected in the Bloomberg median (although 5 out of the 11 analysts had anticipated a rate cut). The interest rate differential between the BCRP and the U.S. Federal Reserve is negative by 50 bps and could continue to widen in the coming months, given expectations that the Federal Reserve will implement cuts in its next meetings.
The December statement underscores the following key points:
- Annual headline inflation is expected to converge toward the midpoint of the target range (1%–3%) in the coming months, while core inflation is projected to remain around 2.0% through 2026.
- Inflation expectations have remained stable at 2.2%.
- Leading indicators show a good performance in November.
- Economic activity expectations and the current situation remain in the optimistic range and they have improved compared to the previous month, in a context where economic activity is hovering around its potential level.
- The global economic outlook points towards moderate growth in a context of decreasing trade tensions.
We preliminarily estimate that headline monthly inflation for December will be positive, reaching approximately between +0.2% and 0.3%, driven by an increase in the food category and other seasonal factors in December. As a result, twelve-month inflation is likely to rise from 1.4% in November to 1.6% in December.
Twelve-month inflation expectations have edged down slightly, from an average of 2.19% in October to 2.16% in November. For this reason, the real interest rate increased slightly from 2.06% to 2.09%, very close to the neutral rate (2.0%). By year-end, economic agents anticipate a range between 1.7% and 2.0%, and for 2026, between 2.2% and 2.3%, according to the latest Macroeconomic Expectations Survey by the BCRP published on December 4th. On our part, we expect inflation to close at approximately 1.6% in 2025 and around 2.2% in 2026 (chart 1).
—Ricardo Avila
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