Surprise rate cut in Peru, further reductions to come

Although the timing of last night’s interest rate cut in Peru caught us (and the market) by surprise, we had been one of the few forecasters expecting rates to fall in the first half of this year. The accompanying statement suggests that this isn’t the start of an easing cycle, but we expect at least one more 25bp reduction to 3.00% in the coming months. Meanwhile, interest rates in Chile were left unchanged at 3.00% but with inflation set to fall, we are increasingly comfortable with our non-consensus call for rates to be cut by 50bp this year.