Peru’s central bank has raised its main interest rate for the first time since 2023, because prices are climbing faster than it wants. The Central Reserve Bank of Peru (BCRP) lifted the rate by 0.25 percentage points, from 4.25% to 4.50%, on Thursday 12 November 2026.
Food and energy costs pushed annual inflation in Lima to 5.3% in October, well above the bank’s target range of 1% to 3%. For US investors in Peruvian assets, the move shows a central bank willing to act before price rises spread.
Key Facts
—Power Index Peru ranks 5th of 14 in The Rio Times Latin America Power Index, with 53.9 points (November 2026 edition).
—Who. Peru’s central bank, the BCRP, which sets the country’s benchmark interest rate.
—What. The reference rate rose 0.25 points to 4.50%, the first increase since 2023.
—When. The decision came on Thursday 12 November 2026.
—Next step. Coming growth and jobs data will show whether demand is cooling.
Peru’s central bank has raised its benchmark rate to 4.50% to pull inflation, now 5.3%, back toward its 1% to 3% target.
What Happened
The BCRP’s board took the decision at its monthly monetary policy meeting, known as the Programa Monetario, and announced it on Thursday 12 November 2026. The reference rate is the interest rate the bank uses to steer short-term borrowing costs across the economy.
The bank said this is its first increase since 2023. It said the aim is to return inflation to the target range, citing strong supply shocks, expectations above that range and lively domestic demand.
The bank also said the decision does not necessarily start a run of increases. It will weigh core inflation, expectations, economic activity and how long the supply shocks last before changing the rate again.
Why It Matters
Annual inflation in Lima, the measure the bank follows, rose from 4.5% in September to 5.3% in October, the bank said. INEI, Peru’s national statistics institute, put the October figure at 5.25% and the monthly rise at 0.57%.
INEI said food and non-alcoholic drinks rose 1.62% in the month, led by fish, vegetables and potatoes. Transport costs also climbed on higher air, road and fuel prices.
Expectations are the bank’s second worry, because they can lock in higher prices. Twelve-month inflation expectations held at 3.1%, slightly above the 3% ceiling of the target range.
Core inflation, which strips out food and energy, edged up from 4.5% to 4.6%, the bank said. Without transport as well, it stood at 2%, the middle of the target range.
The bank points to El Niño, a warming of Pacific waters that disrupts weather and food supply, and to tensions in the Middle East. It said some of their effects have already reached prices and could prove more lasting than expected.
The bank expects headline and core inflation to return to about 2% over its forecast horizon as the supply shocks fade. It added that most early indicators of activity for October still showed good performance.
What to Watch Next
The next releases on growth and unemployment will show whether domestic demand is cooling. The bank has said a series of hikes is not necessarily coming.
A slowing economy would test the bank’s view that domestic demand is still strong. The bank’s own forecast is that inflation returns to about 2% over its projection horizon as supply shocks fade.
What Is Not Known
The bank has not said whether more increases will follow. It says that depends on core inflation, expectations, activity and the length of the supply shocks.
It is also unclear how long El Niño and the Middle East tensions will push prices up. The bank itself says some of their effects may be more persistent than expected.
What It Means for You
A higher policy rate generally makes borrowing in soles dearer and saving in them more rewarding. The sol traded at about 3.41 per US$ early on Friday 13 November 2026 (market-data rate), and more background is in our Peru coverage.
Frequently Asked Questions
What is the BCRP’s reference rate?
It is the interest rate the Central Reserve Bank of Peru sets to guide short-term borrowing costs. It now stands at 4.50%, up from 4.25%.
Why did Peru raise its interest rate?
Annual inflation reached 5.3% in October, above the 1% to 3% target, and expectations also sit above that range. The bank also cited food and energy prices, El Niño and Middle East tensions.
Will more increases follow?
The bank says this does not necessarily begin a series of increases. It will decide on further moves from core inflation, expectations, activity and the length of the supply shocks.
Sources: Central Reserve Bank of Peru, Programa Monetario; INEI, October 2026 consumer prices for Lima.
This article was produced by The Rio Times’ automated AI newsroom. Editorial responsibility: Matthias Camenzind, Publisher and Editor-in-Chief. The Rio Times also runs Ask Rio Times, which answers from 100,000+ of our own articles, the daily Latin America Power Map, and prediction-market odds on elections and markets.. How we use AI · Report an error