Central Reserve Bank of Peru

November 8, 2013

The policy interest rate of Peru’s central bank was cut late Thursday for the first time since August 2009 and changed for the first time since a 25-basis point hike in May 2011.  The rate level now becomes 4.0%, 25 basis points less than previously.  Analysts did not anticipate this change, which in a statement from officials was justified on five counts.  First, the monetary policy stance after this move becomes consistent with the 2.0% inflation target.  Two, officials anticipate sub-trend economic growth.  Three, global growth has slowed.  The fourth factor is lessening and in-target expected inflation, and the fifth is a reversal of supply factors affecting inflation temporarily.  To avoid speculation that today’s rate cut will be the first of several, officials included the the sentence “This decision is preventative and does not imply a sequence of reductions in the reference interest rate.”  The next Board meeting is scheduled for December 12.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.


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