Peru Keeps Rates Steady for 11th Straight Meeting

Peru’s Central Reserve Bank unexpectedly kept its benchmark interest rate unchanged at 4.25% in October 2026, extending its pause for a 13th consecutive meeting, defying expectations of a 25 bps hike. Annual inflation accelerated to 4.5% in September from 4.4% in August, marking the seventh consecutive month above the central bank’s 1%-3% target range due to higher fuel and electricity prices. Meanwhile, inflation excluding food and energy remained at 4.5%. Excluding transportation, underlying inflation stood at 1.8% and has remained below 2% since April 2025. Twelve-month inflation expectations stood at 3.1%, slightly above the upper limit of the target range. The central bank expects inflation to return toward 2% as supply shocks fade. However, the risks of El Niño and Middle East tensions could have persistent effects on inflation. Current-conditions indicators were mixed in September, while expectations indicators remained in optimistic territory, albeit with some moderation.

Peru’s Central Reserve Bank kept its benchmark interest rate unchanged at 4.25% in September 2026, extending its pause for a 12th consecutive meeting. Annual inflation rose to 4.4% in August from 4.1% in July, mainly due to a base effect from negative monthly inflation a year earlier, while inflation excluding food and energy eased to 4.5% from 4.6%. Excluding transportation, underlying inflation stood at 1.8% and has remained below 2% since April 2025. Twelve-month inflation expectations increased to 3.1% from 3.0%, slightly above the upper limit of the target range. The central bank expects inflation to return toward 2% as supply shocks fade, although El Niño and Middle East tensions could keep inflation pressures elevated. Economic activity remained strong in August, with all current-conditions indicators improving and expectations staying optimistic, though somewhat more moderate. Global risks remain elevated, reflected in greater financial-market and oil-price volatility.

Peru’s Central Reserve Bank kept its benchmark interest rate unchanged at 4.25% in August 2026, extending its pause for an eleventh consecutive meeting. Annual inflation rose to 4.1% in July from 4.0% in June, while core inflation increased to 4.6% from 4.5%, remaining above the 1–3% target range. However, excluding transportation, core inflation stood at 1.7% and has remained below 2% since April 2025. Twelve-month inflation expectations edged up to 3.0% from 2.8%, reaching the upper limit of the target range. The central bank expects inflation to return toward 2% as supply shocks fade, though a stronger El Niño and renewed Middle East tensions pose upside risks. Meanwhile, economic activity remained strong, with business sentiment improving and expectations firmly in optimistic territory. Global risks have moderated amid more normalized hydrocarbon supplies, although geopolitical and trade uncertainties persist.