Peru Rate Decision: No Change

December 9, 2010

Following five consecutive monthly increases in Peru’s monetary policy reference rate, there have now been three meetings without a change in the 3.0% rate.  The combined increase of 175 basis points reversed a third of the steep reduction of rates during the recession and left the rate at a more normal level.  Meanwhile, Peruvian inflation of 2.2% last month was near the middle of the 1-3% target band, and inflation expectations remain anchored despite vibrant economic growth.  Officials are sensitive about the risk of excessive capital inflows and have substituted higher reserve requirements as a safer way of reining in monetary stimulus.

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



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