Central Bank Rate Hike in Peru

August 13, 2021

An interest rate hike surprise has been sprung by officials at the Central Reserve Bank of Peru. With inflation accelerating there more than half a percentage point to 3.8% in July, monetary policymakers doubled their policy interest rate to 0.5%. This increase was the first change since a pair of 100-basis point reductions in March and April of 2020. “. Inflation is expected to return to the target range in the next twelve months and remain within that range for the rest of next year, due to the reversal of the effects of transitory factors on the inflation rate.” Core inflation remains aligned with the middle of the inflation target, and spare resource capacity will persist over the coming years, but officials had also observed a rise in the 1-year expected inflation rate to the top of the central bank’s medium term target corridor.

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