The Directory of Central Reserve Bank of Peru agreed to raise the reference interest rate by 50 bps. to 6.00 percent, continuing with the normalization of the position of monetary politics.
The issuing entity indicated that the following information was considered for this decision:
- The twelve-month inflation rate increased from 8.09 percent in May to 8.81 percent in June, standing above the target range due to the significant rises in the international prices of food supplies and fuels. The twelve-month inflation rate excluding food and energy also rose from 4.26 percent in May to 4.95 percent in June, above the upper limit of the inflation target range.
- The significant and continuous 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 towards levels significantly higher than the inflation targets of central banks, both in advanced economies and in the region. With this, it is projected that inflation would return to the target range between the second and third quarters of next year.
- The downward path of year-on-year inflation is expected to begin in July of this yeardue to the moderation of the effect of international food and energy prices and an economy still below its potential level.
- Twelve-month inflation expectations rose from 4.89 to 5.35 percentbetween May and June, above the upper limit of the inflation target range.
- Most of the leading indicators and expectations about the economy deteriorated in June and remain in the pessimistic section.
- Global economic activity has been recovering at a slower pace due to the persistence of bottlenecks in the global supply of goods and services, the reversal of monetary stimuli in advanced economies, the confinement measures in China and international conflicts.
The Board reported that it is paying special attention to the 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 that guarantee the return of the inflation to the target range in the projection horizon.
In the same session, the Board of Directors also agreed on the following interest rates for operations in national currency of the BCRP with the financial system under the window modality.
- Overnight deposits: 4.00 percent per year.
- Direct report operations of securities and currency, and Monetary Regulation Credits: i) 6.50 percent 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, the Monetary and Exchange Operations Committee may establish higher rates based on the amount of the operations.
Fact
- The next meeting of the Board of Directors in which the Monetary Program will be evaluated is scheduled for August 11, 2022.
