Central Reserve Bank of Peru Tightens Again

July 8, 2010

A statement from monetary officials following today’s third straight monthly increase of 25 basis points in the reference lending rate deleted the prediction contained in the May and June rate hike explanations that this move needn’t foreshadow a sequence of moves, but officials did warn that the uncertain impact of global financial market turmoil could be negative.  The latest increase to 2.0% was called “preventive” like the earlier two.  Although no inflation pressure is evident in Peru, domestic growth is sizzling, with on-year investment-led GDP expansion accelerating from 8.8% in March to 9.3% in April.  Today’s action was expected and left over four-fifths of last year’s rate relief un-reversed.  A series of rate cuts between February 2009 and August 2009 reduced the reference rate from 6.50% to a low of 1.25%.

Copyright Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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