FX.co ★ Peru’s Cuts Rate to 4.5%

The Central Bank of Peru has decreased its benchmark interest rate by 25 basis points to 4.5% during the May 2025 meeting, following a three-month halt in rate adjustments. This decision aligns the policy rate more closely with the estimated neutral level, with any future modifications contingent upon shifts in inflation dynamics and economic data. In April, headline inflation increased by 0.32% month-over-month, while core inflation, which excludes food and energy, was at 0.14%. The annual inflation rate rose to 1.7%, up from 1.3% in March, mainly due to rising food prices, although core inflation remained stable at 1.9%, which is in line with the central bank’s target range. Inflation expectations for the next 12 months remained unchanged at 2.3%, still within the target band. The Central Reserve Bank of Peru (BCRP) noted a slight decline in both current and anticipated economic activity indicators, but they indicated that sentiment remains generally optimistic, suggesting that the economy is likely operating close to its potential.