Central Reserve Bank of Peru to release interest rate decision

Peru’s Central Bank (BCRP) is set to release an interest rate decision today, likely maintaining the rate at its current level of 0.25%.

The interest rate was cut to its record-low level in April in response to the COVID-19 pandemic. BCRP has been willing to accommodate necessary rate changes as Peru struggles to combat the virus, putting further rate cuts on the table should they be necessary. Inflation has remained between the 1-3% target range, allowing the bank some leeway to adjust interest rates as necessary.

Recent political turmoil in the country, which last month saw three different presidents in a week, has generated some concern about the prolongation of economic recovery. Peru’s economy will be hit hard this year, with the IMF predicting a -13.9% drop in GDP, likely leading to low interest rates for the near future. Large national savings allowed Lima to implement a $26 billion-dollar stimulus plan in April, the largest in the region. But no additional stimulus is on the table as lawmakers are focused on reactivating the economy through a vaccine distribution plan for next year. This has created some optimism with the Peruvian government, which expects 10% growth in GDP in 2021.

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