Central Reserve Bank of Peru Tightens Again

April 7, 2011

As analysts expected, officials at Peru’s central bank lifted their reference interest rate by another 25 basis points just as they had done each month of this year’s first calendar quarter.  That cumulative one percentage point of tightening, which leaves the key rate at 4.0%, augments five rate hikes last year, respectively of 25 basis points each in May, June and July and 50 bps each in August and September.  Earlier from February to August of 2009, the key rate was cut by a total of 525 basis points from 6.50% to a low of 1.25%.

A statement posted today’s on the BCRP’s website speaks of offsetting the impact of higher fuel and food prices on expected inflation in the context of high growth in domestic demand.  On-year Peruvian CPI inflation stands now at 2.7% compared to 2.1% at end-2010.  Core inflation is at 2.4%.  Officials are prepared to tighten further as needed in order to ensure that inflation falls within its target range.  The Policy Board next meets on May 12.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.



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