Peru’s Central Reserve Bank (BCRP) raised its benchmark interest rate by 25 basis points to 4.50% in November 2026, its first increase in nearly four years, in line with market expectations. The decision reflected the impact of supply shocks, higher inflation expectations, and solid domestic demand.
Annual inflation accelerated to 5.3% in October from 4.5% in September, driven mainly by rising food and energy costs. Core inflation excluding food and energy edged up to 4.6% from 4.5%, while the measure excluding food, energy, and transportation held at 2.0%, remaining within the central bank’s 1%-3% target range. Twelve-month inflation expectations stayed at 3.1%, above the upper bound of the target.
The BCRP expects inflation to gradually return to the target range and converge toward 2% as supply-side shocks recede, but cautioned that El Niño and geopolitical tensions in the Middle East could prolong price pressures. Economic activity indicators remained strong in October, and although business confidence eased, it stayed in optimistic territory. The central bank emphasized that this rate hike does not necessarily signal the start of a broader monetary tightening cycle.