MNI BCRP Preview – Jan '25: Close Call, But Pause Could Extend

Executive Summary

• With the BCRP’s easing cycle nearing an end, as the policy rate approaches a neutral level, this week’s decision looks like being a close call, with analysts split between a 25bp cut and another hold.
• Headline CPI inflation returned to target last month, but core price pressures edged higher and economic activity remains robust.
• While the CPI data will be a welcome development for the committee, a more hawkish Fed and the monthly BCRP schedule for MPC decisions may offset any immediate prospects for further easing.

Click to view the full preview: MNI BCRP Preview - Jan 2025.pdf

In its policy statement last month, the BCRP indicated that it remains in a data dependent mode and did not commit to any particular future action. Since that meeting, economic activity data came in slightly stronger than expected, while CPI inflation surprised to the downside in December. Headline consumer prices rose by just 0.11% m/m last month, according to the National Statistics and Information Institute, below the 0.30% analyst estimate. As a result, the annual headline inflation rate dipped back below the central bank’s target to 1.97% y/y, from 2.27%, below the surveyed median estimate of 2.20%.