Peru Gets Another Central Bank Rate Hike

March 11, 2011

The Central Reserve Bank of Peru lifted its reference rate by 25 basis points for the third straight month and released a statement calling the action “preventive” in the face of rising world food and energy costs.  Inflation stands at just 2.2%, but Peru has one of Latin America’s fastest-growing economies.  The reference rate now becomes 3.75%, up from 3.0% at the end of 2010.  The central bank paused its tightening during the final quarter of 2010 but had previously implemented five consecutive increases of 25 bps each in May, June and July and 50 bps apiece in August and September.  From February through August of 2009, the key rate was cut by 525 basis points from 6.50% to a cyclical low of 1.25%.  The Policy Board next meets April 7, and Peruvian presidential elections will be held April 10.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.

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