Overview
- The Banco Central de Reserva del Perú increased its reference rate by 25 basis points to 4.50% in mid‑November to help return inflation to the 1–3% target range.
- October headline inflation rose to about 5.3% year‑on‑year, pushed mainly by higher food and fuel prices and climate effects tied to El Niño, which the bank described as strong supply shocks.
- BCRP staff forecast a clear drop in annual inflation starting in March 2027 and a path toward roughly 2% by the end of 2027, but the bank said the November move does not commit it to a series of further hikes.
- Analysts warn the rate rise will raise borrowing costs unevenly — corporate loans will feel it first while small and micro businesses face larger, slower pass‑through — and could cool consumption and investment.
- The decision recalls the 2023 tightening episode and its growth costs, so the BCRP stressed it will keep evaluating inflation, expectations and activity before adjusting policy again.