Central Bank of Peru leaves rates unchanged in February

Central Bank holds steady, matching market expectations: At its meeting in mid-February, the Central Bank of Peru (BNRP) kept the policy interest rate at a more than three-year low of 4.25%. The hold was in line with market expectations.

Subdued inflation and robust GDP growth drive wait-and-see approach: A rate hike was not warranted as inflation remains subdued and within the target range the Central Bank’s 1.0–3.0% target range. In contrast, the BNRP decided not to cut rates as the economy is growing at a healthy rate, export prices are elevated and inflation is expected to move back towards the center of the target range in the coming months. Elevated international uncertainty further supported the decision to hold.

BNRP could cut rates in 2026: The Central Bank provided no explicit forward guidance on future interest rate moves. Most panelists expect the Central Bank to cut rates slightly this year, though several see the Bank on hold.

Panelist insight: On the outlook, Goldman Sachs’ Santiago Tellez said: “We maintain our base case that the policy rate is likely to remain at 4.25% for the foreseeable future given a largely closed output gap, well-anchored inflation expectations, and a policy stance very close to neutral territory. The ex-ante real rate now stands at 2.2%, only slightly above the estimated real neutral rate of 2.0%.” EIU analysts are more dovish: “The BCRP is approaching the end of a monetary easing cycle that began in late 2023, but still has room for some more cuts. Inflation and 12-month inflation expectations have been comfortably within the BCRP's 1-3% target band for more than a year and the current policy rate of 4.25%—unchanged at the last meeting on January 9th—is still above (albeit near) Peru's neutral rate. Our forecast is that the Federal Reserve (Fed, the US central bank) will make two final cuts in 2026. This will give room for the BCRP to finish its own easing cycle—leaving the rate at 3.75% by the second half of 2026, which is consistent with estimates of a neutral rate between 3.5% and 4%.”

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