Peru Monetary Policy


Central Bank raises reserve requirements on foreign currency deposits again

At its 7 March monetary policy meeting, the Central Bank maintained the reference rate at 4.25%, in a decision expected by the market. The decision marks 22 consecutive months in which the Bank has refrained from changing the main monetary policy rate.

In its accompanying statement, the Central Bank argued that inflation continues to ease, reflecting the reversal of supply-side shocks. Moreover, monetary authorities estimate that inflation will gradually converge to 2.0% in the coming months amid improving conditions in food supply. Meanwhile, officials acknowledged that recent economic indicators show that growth has reached its potential and has stabilized near its sustainable long-term rate. The next monetary policy meeting is scheduled for 11 April.

Meanwhile, on 27 February, the Central Bank announced that it would raise the average reserve requirements ratio by 0.5 percentage points only on foreign currency deposits. The decision, which is effective as of 1 March, follows a similar move made on January, when the Bank raised the reserve requirements by a full percentage point. With the move, monetary officials seeks to soften the impact of capital inflows from abroad on the expansion of credit and, consequently, on the appreciation of the local currency. Moreover, the Bank declared that it would also bolster measures to curtail demand for car loans and mortgages denominated in foreign currency.

A majority of panellists polled by LatinFocus Consensus Forecast expect that monetary authorities will maintain the reference rate unchanged this year, with a year-end projection of 4.33%. For 2014, the participants expect the monetary policy rate to end the year at 4.62%.

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Peru Monetary Policy Chart

Peru Monetary Policy March 2013

Note: Central Bank Reference Rate in %.
Source: Peru Central Bank (BCRP).

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