2024-01-11 10:45:00
Thus, the key rate would drop in January, for the fifth consecutive month, from 6.75% to 6.50%, according to the majority of local and foreign banks.
Until last month, a certain bias persisted among banks and analysts that the BCR would pause in its downward sequence of the reference rate, especially due to the risks of an El Niño phenomenon of severe magnitude, which might alter the downward trajectory of the inflation.
However, recent reports from Enfen, which show a lower probability that this climatological anomaly will be of moderate intensity (37%) and weak (12%), have partly dispelled these fears, so analysts see less obstacles for the issuing institute to continue making its monetary policy more flexible.
READ ALSO: Companies negotiate with banks and new suppliers to face El Niño
Inflation slows
In the BCR’s decision, the deceleration of inflation to 3.24% at the end of 2023 will prevail, close to the target range of the issuing institute (between 1% and 3% annually), the head of macroeconomics at Intéligo SAB, Luis Eduardo Falen, tells Gestión. .
Add to this the fact that core inflation (which does not include food and energy prices) entered the target range in December (2.9%) and the weakness of the local economy, which would have contracted 0.5% in 2023.
“Inflation has been falling consecutively, and in a context in which the economy is decreasing, the Central Bank is expected to lower the interest rate,” emphasizes Falen.
“A few months ago, in October and November, it was thought that the BCR would pause at the beginning of 2024, but the new information from the environmental authorities removes fears of inflationary pressures due to El Niño and that gives confidence to the Central Bank. greater freedom to reduce interest rates,” he adds.
READ ALSO: Companies take “bridge loans” to face high interest rates this year
Will there be more BCR rate cuts in the coming months?
“If the weakening of the weather anomalies continues in the coming weeks and, consequently, the impacts of these on the food supply are not very important, inflation in year-on-year terms might continue to decline at the beginning of the year, a scenario in which It would not be surprising if the cuts in the monetary policy reference interest rate also continue,” considers BBVA Research senior economist, Hugo Vega.
Intéligo SAB projects that the BCR interest rate will drop this year from 6.75% to 4.75%, or even below that level if a weak El Niño materializes, Falen says.
The president of the BCR, Julio Velarde, stressed in December that he will continue to be cautious when deciding on interest rates.
READ ALSO: Banks will be more cautious in evaluating lines of credit to people and companies
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