Second Easing in Seven Months by Central Reserve Bank of Peru
July 11, 2014
Peru’s reference interest rate has been cut to 3.75% from 4.0%. A reduction to 4.0% from 4.25% last November was the first cut in just over four years. In between from a low of 1.25%, the central bank rate was increased by 175 basis points during 2010 and by 125 bps in the first five months of 2011. A statement from monetary officials expresses a readiness to ease additionally if necessary but suggests that such a need will be probably unlikely. In justification of the latest rate cut, which returns the rate to its level in April 2011, the statement notes continuing sub-trend domestic growth, moderating supply-side cost pressures, lower inflation in June than May, well-anchored inflation expectations, and some disappointing indications related to global demand conditions. CPI inflation is expected to drop to the upper part of the 1-3% target corridor in 2014 and to converge on the target midpoint next year.
Copyright 2014, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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