Peru Monetary Policy March 2016


Peru: Central Bank holds interest rate at 4.25%

March 10, 2016

The Central Bank decided to maintain the reference rate at 4.25% at its 10 March monetary policy session. The Central Bank had hiked the rate four times in the past seven months. Market analysts had mixed expectations over whether the Bank would hold the rate or decide to increase it by 25 percentage points.

According to the Central Bank, inflation pressures remain elevated, however, in part due to temporary factors such as food prices. In addition, the weak exchange rate is contributing to price pressures. The Bank also added that inflation expectations are high.

The Central Bank commented that the global economy continues to display mixed signals regarding growth. The Bank added that lower volatility has been seen in financial markets and emerging market currencies have gained ground. Regarding Peru, the Bank explained that recent indicators suggest growth is near potential.

Against this backdrop, the Bank considered it appropriate to hold the reference rate. The next monetary policy meeting is scheduled for 14 April.

Panelists participating in the LatinFocus Consensus Forecast expect an average monetary policy rate of 4.48% at the end of 2016. For 2017, the panel projects an average rate of 4.51% at the end of the year.

Author: Angela Bouzanis, Senior Economist

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Peru Monetary Policy Chart

Peru Monetary Policy March 2016

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

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