Central Bank of Peru leaves rates unchanged in July

Central Bank stays put as expected: At its meeting on 10 July, the Central Bank of Peru (BCRP) decided to maintain the reference interest rate at 4.50%. This followed a cumulative 325 basis points of cuts from late 2023 to May this year.

Mild inflation, solid GDP growth and global uncertainty drive hold: The BCRP likely wished to assess the impact of its prior rate cuts over the past 18 months before making any further moves. Economic activity is close to the potential rate, inflation is within the Bank’s 1.0–3.0% target range and should remain so going forward, and global uncertainty is elevated due to Trump’s tariffs; all three factors meant that staying put was the logical option.

Easing cycle close to an end: The Central Bank provided no explicit forward guidance on future interest rate moves. Roughly half of our panelists expect the BCRP to hold steady through the end of 2025, while others anticipate rate cuts of 25 or 50 basis points.

Panelist insight: On the outlook, Itaú Unibanco analysts said: “Following the recent 25 bp rate cut surprise in May, the interest rate differential between the Fed and the BCRP has closed. Given that inflationary pressures remain under control, there is room for at least one more 25 bp rate cut this year. We anticipate the cycle ending at 4% in early 2026.” EIU analysts took a different view: “We expect the BCRP to make just one more policy rate cut of 25 basis points in the second half of 2025 in order to avoid triggering depreciatory pressures on the sol. As such, the BCRP's policy rate will reach 4.25% at year-end and its terminal rate of 3.75% by mid-2026.” 

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