The issuing body clarified that this decision does not necessarily imply a cycle of successive reductions in the interest rate and said that future adjustments in the rate will be conditioned by new information on inflation and its determinants.

The Board of Directors of the Central Reserve Bank of Peru (BCRP) agreed to reduce the reference interest rate by 25 basis points to 5%. With this, the real interest rate is close to the level estimated as neutral. In its monetary program of November, the issuing entity clarified that this decision does not necessarily imply a cycle of successive reductions in the interest rate and said that future adjustments in the rate will be conditioned by new information on inflation and its determinants.

The decision to reduce the reference rate took into account the monthly inflation rate, which in September was 1.8% year-on-year, while global inflation continued to decrease and approach the respective targets of most central banks, and in the case of some countries these targets have already been reached.

"Year-on-year inflation and inflation excluding food and energy are projected to remain within the target range over the projection horizon. However, a slight transitory increase in year-on-year inflation is expected for the rest of the year due to a base effect," the BCR noted.

In addition, for the BCRP, in October, most of the indicators of the current situation and expectations were in the optimistic range, as in the previous month. "The outlook for global economic activity points to moderate growth in a context of normalization of monetary policy in most advanced economies in the face of lower inflationary pressures. However, greater volatility is observed in international financial markets. Likewise, risks arising from international conflicts and their potential effect on international fuel prices, as well as uncertainty about China's growth, continue."

In this regard, the BCRP indicated that the Board of Directors is attentive to new information regarding inflation and its determinants, including the evolution of underlying inflation, inflation expectations and economic activity, in order to consider, if necessary, additional modifications to the monetary policy position. "The Board of Directors reaffirms its commitment to adopt the necessary actions to maintain inflation within the target range," it said.