Peru again holds policy rate at 4¼%; inflation increases in January

By Tali David

Minneapolis, Feb. 8 - The board of the Central Reserve Bank of Peru decided to maintain the monetary policy reference rate at 4¼%, according to a bank news release. The bank last raised the rate by 25 basis points from 4% in May 2011.

The bank said its decision is based on the fact that inflation continues reflecting both the reversal of the shocks on the side of supply and a pace of economic growth close to the economy's potential level of growth.

The annual rate of increased to 2.87% in January from 2.65% in December after inflation in January recorded a monthly rate of 0.12%. On the other hand, core inflation registered a rate of 0.29% and inflation excluding food and energy showed a rate of 0.04%, the release noted.

Inflation is expected to converge to the 2% target in the months ahead.

Some current and advanced indicators of activity show that the growth of the Peruvian economy has stabilized around its long-term sustainable level of growth, even though the indicators associated with the external market still register a weak performance.

The board said it also voted to keep interest rates on lending and deposit operations in domestic currency unchanged at 3.45% for overnight deposits and 5.05% for direct repo and rediscount operations.

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