Peru central bank holds benchmark rate at 4.25%

The board of the Central Reserve Bank of Peru (BCRP) decided to maintain its benchmark interest rate at 4.25% in October. The monetary authority has made no rate adjustments during 2026, after delivering three cuts of 25 basis points each in January, May, and September 2025.

Monthly inflation stood at 0.12% in September, while monthly core inflation excluding food and energy reached 0.07%. On an annual basis, headline inflation increased from 4.4% in August to 4.5% in September, driven mainly by higher fuel and electricity prices. Annual core inflation remained at 4.5%, while annual inflation excluding transport stayed at 1.8%, remaining below 2% since April of last year.

The central bank stated that inflation's deviation from its target band stems mainly from fuel price increases and their pass-through to transport costs in March and April. Twelve-month inflation expectations held at 3.1% in September, slightly above the target range ceiling. The bank projects that both headline and core inflation will return to around 2% over the forecast horizon as supply shocks dissipate.

The authority highlighted upside risks to inflation from the El Niño phenomenon and Middle East geopolitical tensions, alongside elevated global market volatility and oil price swings. Leading activity indicators through September continue to show solid performance, with current-situation metrics showing mixed trends and business expectations remaining in optimistic territory.