Central Reserve Bank of Peru

September 10, 2021

The Central Reserve Bank of Peru’s Board of Directors hiked its policy interest rate twice as much as analysts were anticipating to 1.0% from 0.5%. This was the second straight increase after a hike of 25 bps in August, but unlike then, today’s statement admonishes against assuming more moves following immediately: “The current decision does not necessarily imply a cycle of successive increases in the reference rate.” Peruvian inflation of 4.95% in August was the most since early 2009, but officials attribute the spike to temporary factors and project that inflation will settle back into its target range within a year. Core inflation is only 2.4%. When the pandemic hit in 2020, officials implemented two quick 100 basis point rate cuts in March and April but made no further changes in the rate until the aforementioned hike in August.

Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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