Peru: Monetary authorities leave rates unchanged but rise reserves requirements
January 10, 2013
At its 10 January monetary policy meeting, the Central Bank maintained the reference rate unchanged at 4.25%, in a move broadly expected by the market. The Bank's decision represents the 20th consecutive month in which monetary authorities refrained to change the main monetary policy rate.
In its accompanying statement, monetary officials argued that their decision reflects easing inflation, economic growth near its potential and ongoing uncertainties regarding the global economy. Meanwhile, the Central Bank stated that, for 2013, inflation will gradually converge to its 2.0% target. The next monetary policy meeting is scheduled for 7 February.
Furthermore, on 30 December 2012, the Central Bank announced that it would raise the average reserve requirements ratio by 25 basis points on local currency deposits and by 75 basis points on foreign currency deposits. The decision is effective as of 1 January and follows four similar moves implemented last year. The Bank claimed its decision was a pre-emptive move to curb the pace of liquidity and credit expansion in the financial system, without adding pressure on the currency in a context of high foreign liquidity and low interest rates in global markets.
Author: Ricardo Aceves, Senior Economist