Peru: Central Bank keeps rates unchanged, raises reserve requirements
September 6, 2012
At its 6 September monetary policy meeting, the Reserve Bank of Peru (BCRP) decided to keep the reference rate unchanged at 4.25%, in a decision broadly in line with market expectations. The Bank's move represents the 16th consecutive month in which monetary authorities have kept interest rates unaltered. As in previous statements, the BCRP argued that its decision was justified as the deviation in inflation continues to reflect mainly temporary supply factors, as unfavourable weather conditions have temporarily impacted global commodity prices. In addition, the Bank signalled that the pace of economic growth remains close to its potential. The next monetary policy meeting is scheduled for 11 October. Simultaneously, the Central Bank raised the average reserve requirement ratio by 0.5 percentage points, which follows a similar move in May. The measure affects both national (PEN) and international (USD) deposits. In its accompanying statement, monetary officials claimed their decision was a pre-emptive measure to moderate the inflow of short-term foreign capital and the pace of credit growth, within a context of high liquidity abroad and exceptionally low interest rates in developed economies.
Author: Ricardo Aceves, Senior Economist