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Investing.com - Bank of America forecasts that the Central Bank of Peru (BCRP) will maintain its monetary policy rate at 4.50% when it meets on August 14.
The current monetary policy rate, when adjusted with twelve-month inflation expectations, is very close to what the BCRP estimates as the neutral rate, according to BofA’s analysis.
Markets are currently pricing in approximately 52 basis points of cumulative rate cuts over the next six months, showing a disconnect between investor expectations and BofA’s outlook.
BofA economist Alexander Müller predicts the Peruvian central bank will remain on hold until the Federal Reserve begins cutting rates, barring specific economic developments in Peru.
The bank would only consider rate cuts before Fed action if inflation falls significantly below the 2% target or if Peru experiences a meaningful economic slowdown, according to the BofA forecast.
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