Peru Seen Trimming Quarter Point

Goldman Sachs and Merrill Lynch both expect Peru’s central bank to cut rates by 25bp to 6.0% at its March 5 meeting. “Increased evidence of a sharp activity slowdown, together with global easing, set the path for lower policy rates,” says Merrill. “However, still-high inflation, modestly lower inflation expectations and the PES slide grant a cautious pace versus other LatAm banks,” it adds. Goldman expects inflation to moderate in the months ahead and for the economy’s deceleration to become more visible. Inflation stands at 6.53%, according to the central bank. While Goldman forecasts the rate to drop to 5.0% by June, Merrill Lynch expects loosening to 4.0% by year-end.