Peru's central bank holds rate for fifth consecutive month

Published: July 13, 2018 14:40:14 | Updated: July 14, 2018 12:20:51


Peru’s central bank held the benchmark interest rate at 2.75 per cent for the fifth consecutive month on Thursday as expected.

Citing recovering inflation and signs of more dynamic economic activity despite risks to global growth caused by trade tensions, the central kept the rate, reports Reuters.

All twelve analysts forecast the rate hold in a Reuters poll.

Last year, Peru’s economic growth slowed sharply as inflation slowed to well under the central bank’s target range. But price increases and economic growth have picked up in recent months.

There were “clear signs of greater dynamism” in economic activity, the central bank said, but it noted for the first time that there were growing risks to global growth and financial volatility because of trade tensions.

The central bank added in a statement that it would likely keep its current “expansive” monetary policy until inflation converges to its goal of 2.0 per cent and economic growth resumes its potential annual growth rate of 3.5 per cent.

Inflation rose to 1.43 per cent last month, inside the central bank’s 1 to 3 per cent annual target.

The central bank and the finance minister expect the annual economic growth rate to rise to 4 per cent by the end of the year, from 2.69 per cent in March.

So far this year, the sol currency has depreciated 1.08 per cent against the dollar so far this year amid rising US interest rates.

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