FocusEconomics: Peru's Central Bank leaves policy rate at record low in May

17:42 | Madrid (Spain), May. 20.

On May 7, the Central Reserve Bank of Peru (BCR) decided to keep the policy interest rate unchanged at 0.25% —a record low— after slashing it by 100 basis points last April, the FocusEconomics' LatinFocus Consensus Forecast report has highlighted.

"Duel demand and supply-side economic shocks from the pandemic have drastically darkened Peru's outlook, prompting the Central Bank's switch to an ultra-accommodative stance last month," it expressed.

In the accompanying statement, the BCR highlighted that —on top of record-low interest rates— it was also implementing liquidity injections to provide additional support to the country's economy.

The Bank has been conducting various operations including currency- and security-repurchase agreements, as well as injecting over S/25 billion (US$7.27 billion) in funds through the Reactiva Peru Program, which have helped bring down interest rates.

Looking ahead, the BCR left open the possibility of further easing, saying

it "stands ready to extend monetary stimulus in different ways."

Moreover, inflation is expected to fall due to depressed demand, keeping space open for accommodative action.

The next monetary policy meeting is scheduled for June 11.

FocusEconomics' panelists forecast the monetary policy rate at 0.25% at the end of 2020. For 2021, the panel projects a rate of 1.00% at the end of that year.

Editor's note: Based on information provided by FocusEconomics.

(END) NDP/MVB

Published: 5/20/2020

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FocusEconomics: Peru's Central Bank leaves policy rate at record low in May

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