The Department of Economic Studies of the pointed out that for 2024 it foresees a series of cuts in the interest rate as well as inflation from 3.5% to 2.4%.

“Our interest rate forecast now assumes a cut of 250bps throughout the year, higher than the 200bps previously forecast. This means a terminal rate of 4.25% instead of 4.75%. Our base case now contemplates recurring cuts of 25bps per meeting until 4Q24, when we expect a pause, once the real rate approaches the neutral level of 2%. Likewise, we have revised our inflation projection from 3.5% to 2.4% for this year.”he points out in his latest Weekly Report.

He indicated that the recent of the BCRP at 25bps – the fifth in a row – was in line with what was expected by the market consensus and with the entity’s projections.

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“In its statement, the BCRP once again emphasized that the rate cut “would not necessarily imply a cycle of successive cuts in the key rate,” although the possibility of a pause in the short term is increasingly smaller, due to weaker signals. of El Niño and because we believe that inflation would return to the target range sooner than expected,” he pointed out.

The BCRP emphasized that both core inflation and 12-month inflation expectations are already within the target range (between 1% and 3%) and reaffirmed the forecast that general inflation will reach the target range within the coming months.

Core inflation returned to the target range in December, standing at 2.9%, after 24 months of remaining outside; while 12-month inflation expectations fell from 3.2% to 2.8% in their last reading, returning to the target range after 29 months of remaining outside.



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