No Change in Peru’s 1.25% Central Bank Rate

April 9, 2010

Despite a hint a month ago of a possible rate increase this month but consistent with analyst expectations, the Central Reserve Bank of Peru kept policy steady at settings first established last August.  During 2009, the benchmark interest rate was cut by 25 basis pints in February and March, 100 bps in April, May, June and July, and one final time in August by 25 bps for a cumulative reduction of 525 basis points.  CPI inflation had accelerated from a 12-month increase of 0.29% in November to 0.84% in February of this year.  However, such settled back to 0.76% in March.  Moreover, the prior pick-up reflected cost shocks, not demand-side pressure, and in any case inflation has remained below the floor of the central bank’s 1-3% target range.  Officials consequently can focus for now and aiding the economic recovery.

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



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