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Peru: inflation risks mean interest rates cuts are unlikely

Peru’s central bank kept its policy interest rate on hold at 4.25% and, while the accompanying statement struck a dovish tone, the risk of a surge in inflation means rate cuts are unlikely. That said, with the economy likely to have weakened further in Q1, we are removing the modest rate hikes we had pencilled in for this year and now expect the policy rate to remain on hold until year-end.

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