Peru Holds Rates Steady for 10th Straight Meeting

Peru’s Central Reserve Bank kept its benchmark interest rate unchanged at 4.25% in July 2026 as widely expected, extending its pause for a tenth consecutive meeting. Annual inflation edged up to 4.0% in June from 3.9% in May, while core inflation rose to 4.5% from 4.4%, remaining above the 1–3% target range. However, monthly headline and core inflation readings were consistent with the target band, as June’s increase was driven mainly by higher fish prices. Meanwhile, 12-month inflation expectations eased to 2.8% from 2.9%, staying within the target range. The central bank expects both headline and core inflation to gradually return to around 2% as temporary supply shocks fade, though it warned that a stronger El Niño and renewed Middle East tensions could keep inflation elevated. Policymakers noted that economic activity remained robust, with business sentiment improving further, while global risks eased somewhat amid lower oil prices, although geopolitical uncertainty persists.

Peru’s Central Reserve Bank kept its benchmark interest rate unchanged at 4.25% in June 2026 as widely expected, extending its policy pause for a ninth consecutive meeting. Annual inflation eased to 3.9% in May from 4.0% in April, while core inflation held at 4.4%, remaining above the 1–3% target range. Meanwhile, 12-month inflation expectations edged up to 2.9% from 2.8% but stayed within the target band. The central bank expects both headline and core inflation to gradually return to target and converge toward 2% in 2027 as temporary supply-side shocks fade. Economic indicators continued to point to solid activity in May, with most business sentiment and expectations measures remaining in optimistic territory. However, policymakers noted elevated global risks stemming from Middle East tensions. The Board reiterated that it remains closely focused on inflation, expectations, economic activity, and supply shocks, and will adjust policy if needed to ensure inflation returns to target.

Peru’s Central Reserve Bank kept its benchmark interest rate unchanged at 4.25% in May 2026, extending the pause for an eight consecutive meeting and matching market expectations. The annual inflation accelerated to 4% in April from 3.8% in March, while core inflation rose to 4.4% from 3.7%, remaining above the 1–3% target range. The increase was mainly driven by higher transport fares and fuel costs amid elevated global oil prices linked to Middle East tensions. Still, twelve-month inflation expectations rose only slightly to 2.8% from 2.5%, remaining within the target range. The central bank expects inflationary pressures to gradually ease, with inflation projected to return closer to 2% in 2027. Meanwhile, leading indicators continued to show solid economic activity, though business expectations weakened somewhat in April. The Board said it remains attentive to inflation, expectations, and economic activity, and will adjust policy if needed to ensure inflation returns to target.