Peru: BCR cuts benchmark interest rate to 2.25%

To make this decision, the issuing entity projects that the inter-annual inflation rate will be around 2%, within the projection horizon.

Likewise, BCR considers that inflation in October stood at 0.11%. Thus, its inter-annual rate went from 1.85% in September to 1.88% in October 2019.

It adds that the monthly inflation rate —without food and energy— was 0.23%. Therefore, its annual rate went from 2.16% (September) to 2.34% (October) due to transitory factors, such as the increase in water, electricity, and transportation rates. Without these transitory factors, the monthly inflation would have been negative.

Furthermore, BCR says that the 12-month inflation expectation remained at 2.2% in October.

The Central Reserve Bank considers that the primary sectors' economic activity had a negative performance in the January-September period. However, it was offset by non-primary sectors' activity.

According to the issuing entity, business expectations in October pointed to a slight improvement.

It also considers that the risks —concerning the world's economic activity due to commercial tensions— have been eased.

BCR notes that this decision does not necessarily imply additional interest rate reductions.