Central Reserve Bank of Peru

November 16, 2015

As at October’s Board meeting, Peruvian monetary policy makers agreed not to change their key 3.5% interest rate.  A 25-basis point hike in September had reversed the direction of policy after cuts of that size engineered in November 2013, July 2014, September 2014 and January 2015.  Prior to September 2015, the monetary policy rate had not been raised since May 2011.  A risk persists that a second hike might occur before much longer.  Headline CPI inflation of 3.66% in October and core inflation of 3.46% were both above the 1-3% target range.  Higher food prices and the risk of a fall in the Peruvian sol remain upside risks that inflation may not converge on target next year as the baseline forecast assumes.  A statement released after the Board meeting on November 13 called 3.5% appropriate but did not leave any strong clues about what might be decided in December.  The Board meets on the 10th, five days before the Fed is expected to raise the U.S. federal funds rate.

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

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