Andina

Peru: Central Bank keeps benchmark interest rate at 2.25%

09:28 | Lima, Feb. 14.

The Board of Directors of the Central Reserve Bank of Peru (BCR) has decided to maintain the reference at 2.25% expecting year-on-year inflation to be around 2% over the forecast horizon, with a moderate downside bias due to the possibility of a lower-than-expected increase in domestic demand.

Likewise, the financial entity indicated that inflation was 0.05% in January. Consequently, year-on-year inflation remained at 1.9% in January 2020, while monthly inflation —excluding food and energy— stood at 0.07%, so the year-on-year figure also remained at 2.3%.  

On the other hand, BCR pointed out that the one-year ahead expected inflation was reduced from 2.23% to 2.05% last January.

According to the issuing entity, the weak performance of primary industries and public investment in 2019 was attenuated by the activity in non-primary industries. 

Public investment improved in January and economic activity indicators point to a gradual closure of the output gap, while business conditions expectations improved with respect to December 2019.

Furthermore, it underlined that global growth risks from trade tensions have attenuated, although the impact of coronavirus is still uncertain. 

The BCR Board affirmed that it pays close attention to new information on inflation and its determinants in assessing future changes in the monetary policy stance.

The Board also decided to maintain the interest rates on BCR off-auction credit and deposit operations in domestic currency with financial entities.

It arranged: overnight deposits of 1% per year, as well as direct security/currency repo and rediscount operations: i) 2.80% per year for financial entities' first 10 operations over the last 12 months; and ii) the rate fixed by the BCR Monetary and Foreign Exchange Operations Committee for operations other than financial entities' first 10 operations over the last 12 months.

It also decided that Dollar swaps should have a fee equal to a minimum annual effective cost of 2.80%.

Finally, the BCR Board's next monetary policy session will take place on March 12, 2020. 

(END) MDV/MVB

Published: 2/14/2020
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