The BCRP held the policy rate at 5.75% today (13 June), in what was a hawkish surprise relative to our expectations and Bloomberg consensus for a 25bp cut, which leaves the total easing at 200bp for this cycle. The overall message highlighted a sticky core CPI, which rebounded off the 3.0% upper target band to 3.1% in May. The BCRP noted that the May headline CPI signalled a reversal of the effects of supply shocks for some foods and added that annual inflation is projected to remain around the centre of the target range. The May YoY CPI ended at 2.0%, while core stood at 3.1% (just above the top of the target band). The ex-ante real policy rate remains at 3.19%. In addition, Peru’s real policy rate differential to the US now stands at +86bp (using the NY Fed survey), the lowest level since April 2020.
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