Peru: Central Bank holds interest rate at 4.25% in April
April 6, 2017
At its 6 April meeting, the Central Bank decided to maintain the reference rate at 4.25%, where it has been for 14 months now, in line with market expectations.
The decision comes against the backdrop of a surge in inflation due to disastrous weather woes related to an unexpectedly strong El Niño effect, which are nevertheless expected to be temporary. Meanwhile, core inflation was 2.6% in March, which is within the target range of 1.0% to 3.0%, further strengthening the decision to keep rates unchanged for now. Although the economy has been decelerating in Q1, an increase in public spending and higher export prices should keep GDP growth from deteriorating drastically.
The Central Bank struck a relatively neutral tone regarding forward guidance, saying that upcoming monetary policy decisions will depend on incoming data, in particular demand shocks on inflation. The Bank expressed its willingness to ease its monetary policy stance if necessary.
The next monetary policy meeting is scheduled for 11 May.