The
Central Reserve Bank (BCR) indicated that it does not rule out raising its benchmark interest rate in the coming months, taking into account the latest data on inflation, economic activity, and El Niño phenomenon.
"It will depend largely on El Niño; we are waiting to see what happens. The statement we issued after last week's meeting indicated that we are monitoring all data, and, if read carefully, it can be interpreted as meaning that we do not rule out an increase in the coming months," BCR Governor Julio Velarde said.
"The message we are conveying in the statement is almost implicit; it will depend on the data that come in. The rate must be raised at the right time, and that would probably be if El Niño occurs as we expect, but we still have to wait; it is not something mechanical," he indicated.
"We have kept the rate at 4.25%; for years it has been the lowest among South American countries, as well as Mexico. It is a rate that is not particularly restrictive," he explained.
The BCR governor highlighted the strength of domestic demand, employment growth, and rising incomes, which could facilitate the transmission of the supply shock to inflation expectations.
"What concerns us is that expectations could be affected; that is basically what we are seeing," he concluded.
(END) CNA/MVB
Published: 9/20/2026