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October 7, 2022
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BCR raises reference interest rate to a new historical maximum of 7%

BCR raises reference interest rate to a new historical maximum of 7%

The Directory of (BCR) agreed this Thursday, October 6, to raise the reference interest rate by 25 basic points (bps) to 7%, continuing with the adjustments of the monetary policy position.

It is worth mentioning that the twelve-month inflation rate rose from 8.40% in August to 8.53% in September, placing it above the target range due to the significant rises in the international prices of food supplies and fuels.

For its part, the twelve-month inflation rate without food and energy increased from 5.39% in August to 5.51% in September, above the upper limit of the inflation target range.

“The significant increase in international energy and food prices since the second half of last year, accentuated by international conflicts, has led to a sharp increase in global inflation rates to magnitudes not seen in many years and to significantly higher levels. higher than the inflation targets of central banks, both in advanced economies and in the region”, holds the BCR.

Along these lines, a downward trend in year-on-year inflation is projected with a return to the target range in the second half of next year, due to the moderation of the effect of international food and energy prices, and a reduction in inflation expectations .

So much so, that twelve-month inflation expectations fell from 5.10% to 4.89% between August and September, still standing above the upper limit of the inflation target range.

growth prospects

The growth prospects for world economic activity for this and next year have been diminishing due to the expectation of higher increases in monetary policy interest rates in advanced economies, lower growth in China and international conflicts.

In this sense, the Board of Directors indicates that it is attentive to new information regarding inflation and its determinants, including the evolution of inflation expectations and economic activity, to consider additional modifications in the monetary policy position.

In the same session, the following interest rates were agreed for operations in national currency of the BCRP with the financial system under the window modality.

  • Overnight deposits: 5.00 percent per year.
  • Direct report operations of securities and currency, and Monetary Regulation Credits: i) 7.50% per annum for the first 10 operations in the last 3 months; and ii) the interest rate set by the Monetary and Exchange Operations Committee for operations in addition to these 10 operations in the last 3 months. In addition, said committee may establish higher rates based on the amount of the operations.

Finally, they inform that the next session of the Board in which the Monetary Program will be evaluated will be on November 10, 2022.

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