Election campaign heats up; economy grew 3.2% in 2024; new finance minister appointed; BCRP extends pause
In this report, we discuss indications that the election campaign will be brought forward; improved economic performance, resulting in real GDP advancing 4.9% in December and 3.3% in full-year 2024; the appointment of José Salardi as Economy and Finance Minister; and the decision by the BCRP’s Board to stand pat at its February meeting.
As key milestones approach in the runup to the 2026 elections, campaigning is heating up. Although this is happening against the backdrop of the ongoing investigation by the Ministerio Público, Fiscalía de la Nación (MPFN, the Attorney-General’s Office) into President Dina Boluarte and her inner circle, it is nonetheless an indication that the predominant political drivers are gradually changing.
On the economy, two developments came into focus last week. First, according to the Instituto de Estadística e informática (INEI, the national statistical institute), real GDP advanced 4.9% in December, bringing the full-year 2024 figure to 3.3%. Second, Boluarte appointed José Salardi as her new Economy and Finance Minister, replacing José Arista.
The BCRP’s Board at its February 13th meeting decided to keep its policy rate unchanged, at 4.75%. This was in line with our expectations, and may have been in response to inflation performance, and to the rising risk of an import tariff war between the United States and its trading partners. Although the United States is still in a preparatory stage in terms of imposing tariffs on some of its biggest trading partners (as part of an aggressive negotiating strategy), the Board is monitoring developments closely. We retain our forecast that the BCRP Board will deliver one more 25 bp cut in 2025 -- but there is a significant risk that it will stand pat for the rest of the year.
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