Peru Seen Cutting Rate to 1.50%

Peru will cut its monetary policy rate by 50bp to 1.50% in its August 6 meeting, following a 100bp cut to 2.0% in July, according to a Morgan Stanley forecast. “At the last meeting the authorities signaled the end of aggressive interest rate cuts, but with accumulated inflation in the first seven months of the year at 0.21% on the back of three months of sequential price declines … inflation data remains supportive of further policy easing,” the shop says. It expects the rate to drop to 1.25% by the end of the year. Bank of America Merrill Lynch also sees the rate dropping to 1.50% this week and then rising to 3.50% in 2010.