Fifteenth Straight Peruvian Central Bank Rate Hike
October 7, 2022
The policy interest rate at the Central Reserve Bank of Peru was increased late yesterday by 25 basis points to 7.0%. Rate tightening in Peru began back in August 2021 from a pandemic base of 0.25% reached after back-to-back reductions of a full percentage point in March and April of 2020. There had been a dozen consecutive 50-basis point hikes until officials throttled back the incremental size to 25 basis points at the September meeting. But at 7.0%, officials are still running with a negative real interest rate, since CPI inflation has accelerated from 5.2% in September 2021 to 8.5% in September 2022. They are counting on fading external shocks that have elevated food and energy price pressures to to a lot of the work of reducing overall inflation to their target band of 1.5% – 3.5%.
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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