Peruvian Central Bank Rate Cut By 75 Basis Points

August 7, 2009

The Central Reserve Bank of Peru sliced its benchmark lending rate by 75 basis points, not 50 bps as expected, to a five-year low of 1.25%.  The cut announced late Thursday followed 100-bp reductions in July, June, May, and April and cuts of 25 bps each in March and February from a cyclical high of 6.5% at the start of 2009.  A sharp drop in consumer price inflation from 6.75% last November to 2.7% last month has enabled the central bank to ease aggressively to mitigate very weak domestic demand.

Copyright Larry Greenberg 2009.

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