Peru maintains policy rate at 3˝%, says inflation decreases to 3.66%

By Angela McDaniels

Tacoma, Wash., Nov. 13 – The board of the Central Bank of Peru decided to maintain the monetary policy interest rate at 3˝%, according to a bank notice.

As previously reported, the board raised the rate by 25 bps to 3˝% in September.

In Friday’s notice, the bank said the current rate is compatible with the forecast that inflation will reach the target range in 2016 and takes into account the following:

• Inflation has been affected by temporary supply factors, such as the rise in the prices of some food products and utility rates, and by the depreciation of the nuevo sol against the dollar. The bank does not see the effect of these factors extending in a general manner to the rest of prices;

• International indicators show mixed signals of global economic recovery and volatility in external financial markets and foreign exchange markets; and

• Economic activity has been recovering gradually.

Inflation in October was 0.14%. As a result, the interannual rate of inflation decreased to 3.66% in October from 3.9% in September. The bank said the monthly rate of inflation is explained by the increase in the prices of perishable food products and meals outside the home.

Inflation without food and energy was 0.14%, as a result of which the interannual rate of inflation was 3.46% in October, compared with 3.45% in September.

Recent indicators of economic activity and business and consumer expectations show an economic cycle with lower GDP growth rates than the potential output levels but with a faster pace of growth in the second half of the year, according to the bank.

The 2.25% rate for overnight deposits was also unchanged, and the rate for direct repos and rediscount operations is 4.05% for the first 15 operations carried out by a financial institution in the last 12 months.

The board will meet next on Dec. 10.

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