Central Reserve Bank of Peru Drops Hint of Coming Rate Increase

March 12, 2010

Peru’s central bank reference interest rate was left by officials at 1.25% after this week’s policy meeting.  It has been at that level since a 75-basis point reduction last August.  That had been the seventh consecutive monthly easing from a peak of 6.5% in the beginning of last year.  Other reduction amounts were 25 bps each in February and March and 100 bps in each of the following four months.

A new statement today speaks of “clear signs” in activity of “recovery” and “dynamism” and an absence of “signals of inflationary pressures in the short term.”  However, CPI inflation of 0.84% on year in February after 0.44% in January was closer to the 1.0% target, and officials served notice that a start to normalizing policy may be coming soon:   “If required [the Board] will adopt preventative adjustments in the monetary policy to guarantee that inflation falls within the target range.”

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.



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