Peru will have lower inflation than the United States this year and is expected to maintain that trend in 2026,
Last May, Peru recorded a 1.7% annual inflation rate, lower than that of the United States (2.4%), Japan (3.5%), the Eurozone (1.9%), Chile (4.4%), Mexico (4.4%), Brazil (5.3%), among others, according to the Central Reserve Bank's latest Inflation Report.
"Last year's inflation was lower than that of the United States; it will also be lower this year; next year we expect it to be lower as well; ultimately, we aim for inflation to be equal to or lower than that of the United States," Velarde indicated.
According to the Central Reserve Bank, after recording an annual inflation rate of 8.5% in 2022, 3.2% in 2023, and 2% in 2024, Peru's inflation is projected to stand at 1.8% in 2025 and 2% in 2026.
In that regard, he noted that with sustained low inflation below that of the United States, Peru's benchmark interest rate will also be lower than that of the North American country, meaning that Peruvian 10-year sovereign bonds would yield a lower rate than U.S. Treasury bonds.
"I believe it can be achieved, and hopefully in 10 or 15 years we will see Peruvian bonds yielding lower rates than U.S. bonds," Velarde said.
On another note, he highlighted that since 1900, Peru has not experienced such a long period of low inflation.
According to BCR data, Peru has maintained single-digit inflation continuously since February 1997.
Similarly, Velarde pointed out that Peru has the lowest inflation rate in South America, Mexico, and several developed countries.
"At this moment, we have the lowest inflation in all of South America and Mexico —lower than the United States, lower than the United Kingdom, lower than Japan, and lower than the European Union," the economist pointed out.
"For quite some time now, our inflation target has been 2%, more or less —the same target as the United States, Europe, Japan, and the United Kingdom, which is the standard among developed countries," Velarde noted.
"Why should we aim for a higher target if we are capable of achieving this one? I believe that, over time, what I would hope —and that will depend on whoever succeeds me— is that this low inflation is maintained," he said.
Moreover, in response to questions from the audience, the BCR governor advised young people that they can achieve their goals and help improve the country "through hard work and ethical values."
He made these remarks on Monday, during the launch of the economic essay contest organized by the Lima Chamber of Commerce (CCL), titled the "Julio Velarde Award."
It is aimed at students and recent graduates in Economics, Economic Engineering, and Finance, as a tribute to his work at the helm of the Central Reserve Bank.
The contest intends to promote critical analysis and the development of innovative proposals on the country's economic growth.
It is named in his honor as a tribute to his leadership in managing Peru's monetary policy, which has resulted in one of the lowest inflation rates and a stable exchange rate in the region.