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Peru keeps 3½% reference rate; inflation to converge to 2% in 2015
By Toni Weeks
San Luis Obispo, Calif., Dec. 1 – The Central Reserve Bank of Peru’s board decided to keep the monetary policy reference rate at 3½%.
The rate was last changed in September from the 3¾% mark in August.
The bank also decided to keep the annual interest rates on lending and deposit operations in domestic currency (not included in auctions) at 2.3% for overnight deposits and at 4.3% for direct repos and rediscount operations. Swaps were kept at a commission equivalent to a minimum annual effective cost of 4.3%.
According to a bank notice, the level of the benchmark rate is compatible with the forecast that inflation will be converging to the 2% target in 2015. The forecast takes into account that current and advanced indicators of economic activity still show a pace of growth below its potential level, and international indicators show mixed signals of global economic recovery and increased volatility in financial and exchange markets.
As previously reported, inflation in October showed a rate of 0.38%, and inflation in the last 12 months rose to 3.09% in October from 2.74% in September due to transitory supply factors. Inflation without food and energy came in at a rate of 0.12%, resulting in the interannual rate of inflation falling to 2.56% in October from 2.57% in September.
The release stated that current and advanced indicators of activity continue to show a weak economic cycle, with lower GDP growth rates than the ones of the potential output.
In November, the board continued lowering the reserve requirement rate in domestic currency to 10% from 10½% with the aim of supporting the growth of credit in soles, the notice said.
The monetary program for December will be approved on Dec. 11.
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