Lately, the Central Reserve Bank of Peru reduced its monetary policy reference rates by 0.25% (25 basis points), this measure that regulates interbank rates in national currency could push down most rates in the financial system, both Active as passive.
The reference rate is regulated each month by the issuing entity and directly affects the interbank in local currency, which is a rate with which banks lend to each other. When this rate falls or rises, it directly affects the financial costs of the banks.
In November the reference rate was set at 4%, due to the possible contraction of the liquidity of the economy due to the economic slowdown. It is likely that the reference rate will drop this year, with which the financial system rates are expected to begin a gradual reduction trend.
However, this last effect is offset by bank concentration
Which means that the average rates of the financial system do not necessarily fall by the same magnitude as the reference rates.
This measure must go hand in hand with an efficient and aggressive spending policy of the Ministry of Economy, as this will prevent the contraction of liquidity of the financial system and the strong deceleration of the local economy, which has been growing at rates lately lower than expected, which may be possible to grow at rates of 5% or less, contrasting with lost activity growth of more than 10%.
One of the side effects of the reduction of rates
By the issuer is that it reduces the supply of dollars, by discouraging the entry of swallow capitals by reducing the rate and portfolio returns, thereby pressing the foreign currency at rise. This can be dangerous because it can activate credit exchange risk, that is, the mismatch of assets in local currency with debts in foreign currency. The only positive thing about the rise in the exchange rate, due to the reduction in rates, is that exports would benefit from the increase in the exchange rate (devaluation of the sun).
In this case, the BCRP must weigh in its balance of risks the magnitude of the possible future reductions in the monetary policy reference rate that generally affects the rates of the financial system.