Peru Monetary Policy September 2016

Peru

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

September 8, 2016

The Central Bank decided to maintain the reference rate at 4.25% at its 8 September monetary policy meeting, in line with market expectations. This was the seventh consecutive month in which the Bank left the rate unchanged.

According to the Central Bank, inflation expectations continued to decline gradually in August and inflation in July and August was within the Bank’s target range of 2.0% plus/minus 1.0 percentage point. In addition, the rise in prices for food and services as well as the development of the exchange rate (USD-PEN) are no longer exerting upward pressure on inflation.

The Central Bank commented that the global economy continues to send mixed recovery signals in employment and production levels, while volatility in the global financial markets has cooled down. Moreover, the Bank reported that Peru’s economic growth remains close to its potential. Based on this assessment, the Bank considered it appropriate to maintain the reference rate. The next monetary policy meeting is scheduled for 13 October.

Panelists participating in the LatinFocus Consensus Forecast expect an average monetary policy rate of 4.29% at the end of 2016. For 2017, the panel projects an average rate of 4.55% at the end of the year.


Author: Marlène Rump, Senior Data Analyst

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