MNI BCRP Preview – Apr 2025: On Hold Amid External Uncertainty

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Executive Summary

• The BCRP is expected to keep its policy rate unchanged at 4.75% for a third successive meeting, amid the significant deterioration in risk sentiment following President Trump’s tariffs announcement.
• Last month, the central bank signalled that it remained in a data dependent mode, keeping the door open to potential further easing in the coming meetings.
• Although inflation has fallen further since then, robust economic activity and uncertainty over the external backdrop looks set to keep the Board cautious for now. However, some analysts see scope for a precautionary cut amid mounting global recession concerns.

The historic shift in global trade policy since the previous BCRP monetary policy meeting in March has added huge uncertainty to this week’s meeting, as the central bank has to weigh up the risk of a potential global recession, with the inflationary risk stemming from renewed FX weakness and mounting trade barriers. Most analysts expect the central bank to extend the pause for now to give itself time to assess the impact of President Trump’s tariff measures, but some see scope for a cautious cut as protection against the risk of a global slowdown.