Peru Lowers Interest Rate by 25 bps

Peru’s Central Reserve Bank cut its benchmark interest rate by 25 bps to 4.25% in September 2025. The decision reflected recent inflation dynamics, with headline inflation falling 0.29% in August and core inflation (excluding food and energy) edging up 0.08%. On an annual basis, headline inflation eased to 1.1% from 1.7% in July, largely due to lower food prices. Core inflation rose slightly to 1.8%, while 12-month inflation expectations held steady at 2.2%, both near the midpoint of the target range. Projections suggest inflation will align with the midpoint by year-end, supported by improving domestic indicators, though outlooks for future activity were mixed. Global conditions remain challenging, weighed down by trade restrictions and persistent uncertainty. The BCRP reaffirmed its commitment to adjust monetary policy if needed to keep inflation within the target range, while also updating rates for overnight deposits and other local currency operations.