Peru maintains rate at 4¼%, says local economic activity recovering

By Wendy Van Sickle

Columbus, Ohio, April 15 – The board of the Central Reserve Bank of Peru decided to maintain the monetary policy interest rate at 4¼%, according to a bank notice.

In Friday’s notice, the bank said it took into account when deciding to maintain the rate that

• The global economy continues showing mixed signals of recovery in terms of production and employment;

• The rise in the prices of some food products and utilities and the depreciation of the sol against the dollar have been reversing;

• Inflation expectations have started to decrease; and

• Local economic activity has been recovering.

The board said inflation is expected to gradually return to be within the target range in a period of time similar to the monetary policy horizon.

Inflation in March was 0.6%, and as a result the interannual rate of inflation fell to 4.3% in March from 4.47% in February, the bank said. It attributed the lower monthly rate of inflation to a partial reversal of food prices and by the lower exchange rate of the dollar against the sol.

Recent indicators of economic activity and business expectations show similar GDP growth rates to those of potential output levels.

The board also maintained the rate for overnight deposits at 3%, according to the notice. The rate for direct repos and rediscount operations was kept at 4.8% for the first 15 operations carried out by a financial institution in the last 12 months. For swaps, the commission is equivalent to a minimum annual effective cost of 4.8%.

The board will meet next on May 8.

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