Peru Chops Quarter Point, More Expected

Peru’s central bank has cut the monetary policy rate by 25bp to 6.0%, in line with consensus. The bank says inflation has declined for a fourth consecutive month, to stand at 5.49%, and should keep falling. It says inflation should reach the 2.0%-3.0% target by the end of the year. JPMorgan expected a 25bp cut, but believed the odds of a larger 50bp cut were possible given the rate of disinflation in February. Credit Suisse, which had initially expected the central bank to leave the rate unchanged, but later revised its forecast to a 25bp reduction, expects gradual easing to 5.0% by the year-end.