Peru Monetary Policy February 2017

Peru

Peru: Central Bank holds interest rate at 4.25% in February

February 9, 2017

The Central Bank decided to maintain the reference rate at 4.25% at its 9 February meeting, confirming market expectations.

According to the Central Bank, inflation expectations are within the target range of 1.0% to 3.0% as inflation shows a downward trajectory. Inflation in January was 3.1%, a notch lower than the 3.2% registered in December. Adverse weather conditions caused inflationary pressures on certain food items, but these are expected to be temporary in nature. The Bank expects inflation to reach the target range this year.

The Central Bank commented that the global economy was gradually picking up but noted heightened uncertainty due to political developments in developed countries. Regarding the domestic economy, activity slowed down in the fourth quarter of 2016 on the back of lower government spending. Business confidence decreased slightly but growth projections remained steady at around 3.8% to 4.0% for 2017.

The next monetary policy meeting is scheduled for 9 March.

Panelists participating in the LatinFocus Consensus Forecast expect an average monetary policy rate of 4.32% at the end of 2017. For 2018, the panel projects an average rate of 3.42% at the end of the year.


Author: Marlène Rump, Senior Data Analyst

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Peru Monetary Policy February 2017

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


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