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Peru maintains policy rate at 4¼% as inflation expectations decrease
By Wendy Van Sickle
Columbus, Ohio July 15 – The board of the Central Reserve Bank of Peru decided to maintain the monetary policy reference rate at 4¼%, according to a bank notice.
In the news release the board said it considered:
• Inflation expectations have continued to reverse gradually;
• The effects of the rise in the prices of some food products and utilities as well as the effects of the exchange rate on inflation have been reversing;
• Local economic activity has been showing a pace of growth close to its potential growth level; and
• The global economy continues showing mixed signals of recovery in terms of production and employment as well as lower volatility in financial markets.
Inflation is expected to return to within the target range before the end of the year, the notice said.
Inflation in June was 0.14%, and as a result, the interannual rate of inflation fell to 3.3% in June from 3.5% in May. Inflation without food and energy recorded a rate of 0.2%, resulting in the interannual rate of inflation staying at 3.3% in June, the same level registered in May.
Inflation expectations continue to decrease gradually and show a declining path from an expected rate of 3.2% in the next 12 months to 2.9% in 2017 and 2.5% in 2018.
The board also said it maintained the rate for overnight deposits at 3%. 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 Aug. 11.
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