Central Reserve Bank of Peru

February 13, 2015

After a 25-basis point interest rate cut at the prior monthly policy meeting in January to 3.25%, Peruvian monetary officials asserted that “this interest rate reduction does not imply successive interest rate cuts,” and they have made good on that assertion for at least one subsequent meeting.  Peru’s central bank had also implemented 25-basis point rate cuts in November 2013 and July and September of last year.  The last rate hike occurred in May 2011.  A different kind of easing move was taken, however, and that was to reduce local currency deposit reserve requirements to 8.5% from 9.0%.  In January, such was cut from 9.5% to 9.0%.  Today’s statement from the BCRP Board predicts sub-potential economic growth and a downward convergence on the 2.0% inflation target.  Headline and core CPI are running currently at 3.1% and 2.5%, and price expectations remain firmly anchored on the target.  The statement observes increased global financial and currency market volatility, always reason for policy caution.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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