Peru Raises Rate for First Time in Almost 4 Years

Peru’s Central Reserve Bank (BCRP) raised its benchmark interest rate by 25 bps to 4.50% in November 2026, marking its first hike in nearly four years, in line with expectations. The move reflected supply shocks, higher inflation expectations and strong domestic demand. Annual inflation accelerated to 5.3% in October from 4.5% in September, mainly due to higher food and energy prices. Inflation excluding food and energy rose to 4.6% from 4.5%, while the measure excluding food, energy and transportation stood at 2.0%, within the 1%-3% target range. Twelve-month inflation expectations remained at 3.1%, above the target ceiling. The BCRP expects inflation to return to target and converge toward 2% as supply shocks fade, but warned that El Niño and Middle East tensions could prolong price pressures. Activity indicators remained robust in October, while business expectations slowed but stayed optimistic. The bank said the hike does not necessarily mark a tightening cycle.

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.