Central Bank of Peru leaves rates unchanged in April

Bank extends hold for seventh consecutive meeting: At its meeting on 9 April, the Central Bank of Peru (BCRP) decided to maintain the reference interest rate at 4.25%. This marked the seventh pause since September 2025.

Energy-price shocks motivate hold: The Central Bank left rates steady in April due to a significant increase in inflation. Price pressures rose from 2.2% annually in February to 3.8% in March—above the Bank’s 1.0–3.0% target range—driven by supply shocks, including rising international fuel prices amid the Iran war plus disruptions in natural gas supply caused by a pipeline rupture early in the month. A cut was deemed unnecessary as the Bank assessed that economic activity remains around its potential level, and inflation expectations for the next twelve months have increased but remain within the target range. Meanwhile, the Bank ruled out a hike to the policy rate as it projects headline and core inflation to return within target by year-end, reaching the target midpoint in 2027, conditional on the dissipation of global supply shocks.

BCRP more likely to stay on hold in 2026: The Central Bank did not provide specific forward guidance but emphasized its commitment to closely monitoring incoming data and the duration of supply shocks. Since last month, our panelists have raised their forecasts for the policy rate and a vast majority now expects the Central Bank to stand pat through the end of the year, while a minority sees room for cuts. The trajectory of global commodity prices and domestic inflation remain key to watch. The BCRP should reconvene on 14 May.

Panelist insight: On the outlook, Goldman Sachs’ Santiago Tellez said: “We maintain our forecast that the policy rate will remain at 4.25%, as we think that the [BCRP] remains inclined to look through shocks deemed to be transitory. […] We still expect global fuel prices to decline during 2026, which should provide a deflationary impulse to inflation given fast passthrough to local pump prices. Nevertheless, we acknowledge that the [BCRP] is open to potential tightening should the shocks hitting the economy prove to be more persistent than initially expected.” EIU analysts commented: “The BCRP is approaching the end of a monetary easing cycle that began in late 2023, but the risk of inflationary pressure from higher global oil prices means that the end of this cycle could be delayed until 2027 rather than end-2026 as we currently forecast. […] We expect the BCRP to make two final 25-basis-point cuts in the second half of the year, leaving the monetary policy rate at 3.75% at end-2026 but with a very high risk of the second cut being pushed into 2027 if higher than forecast inflation materialises.”

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