Peru Holds Interest Rate at 4.50% as Inflation Remains Steady and Growth Outlook Improves

Peru’s Central Reserve Bank (BCRP) kept its benchmark interest rate at 4.50% in June 2025, following a 0.25 percentage point cut in May.

The bank’s official statement confirms the decision reflects stable inflation and a cautious approach to future changes, with adjustments depending on new data about inflation and economic activity.

The annual inflation rate in Lima reached 1.69% in May, up slightly from 1.65% in April, but still well within the BCRP’s target range of 1% to 3%. Core inflation, which excludes volatile items, eased to 1.8% in May from 1.9% in April.

Food and non-alcoholic beverages, which make up over a quarter of Peru’s consumer price index, saw price increases accelerate to 1.35% in May. Other categories, like recreation, hotels, and miscellaneous services, also posted modest gains.

Meanwhile, prices for housing, utilities, and transport grew more slowly. On a monthly basis, overall consumer prices fell by 0.06% in May, reversing a rise in April.

The BCRP’s rate cut in May brought the policy rate close to what economists consider a neutral level, meaning it neither stimulates nor restrains economic activity.

Peru’s Central Bank Maintains Steady Policy Amid Positive Growth

The central bank expects headline inflation to return to the 2% midpoint of its target range and sees economic activity operating near its potential. One-year-ahead inflation expectations remain anchored at 2.3%, signaling confidence that price growth will stay contained.

Peru’s economy is forecast to grow between 2.7% and 3.1% in 2025, supported by steady private consumption, positive business sentiment, and new investment in mining and infrastructure.

Analysts note that global trade tensions and political uncertainty ahead of upcoming elections could affect growth and inflation, but current projections remain positive. The sol, Peru’s currency, has shown stability, further supporting economic confidence.

The central bank’s decision to hold rates signals a pragmatic approach. By keeping borrowing costs steady, the BCRP aims to balance inflation control with support for economic growth.

This stance matters for businesses and consumers alike, as it helps maintain price stability and predictable financing conditions. Peru’s monetary policy, grounded in official data, reflects a focus on domestic realities and market fundamentals, not external pressures.