highlighted that Peru maintains a 2% inflation target, similar to those of developed economies such as the United States, the United Kingdom, and eurozone countries.
"Why should Peru have to accept higher inflation than the developed world?" he asked during the ceremony at which he received an honorary doctorate from the Lima-based National University of Engineering (UNI).
"We introduced the inflation target because we were experiencing negative growth. In 2000, gross domestic product (GDP) fell, and a more expansionary monetary policy was needed, but we did not want inflationary expectations to be generated," Velarde indicated.
"This is a framework that I suggested, and I was supported at the time by the Board's Chairman Richard Webb. It was adopted then, and I believe it has been a successful framework," he added.
Velarde noted that other Latin American countries maintain inflation targets of 3% or 4%, while Peru opted for a 2% target, on the premise that no one could oppose having low inflation.
"In 2006, the target was already 2%. Why a target like the one developed countries have? I do not understand (...) why Peru should have to accept higher inflation than the developed world," Velarde stated.
"Other Latin American countries have targets of 3% or 4%; we have the target used by Europe, the United Kingdom, and the United States because we are no different, and people everywhere appreciate low and stable inflation, which is what we seek," he indicated.
The official also maintained that price stability is the BCR's main objective and rejected the notion that controlling inflation is incompatible with economic growth.
"Many people genuinely believe that seeking to control inflation affects growth. There is an abundance of literature spanning more than half a century indicating that inflation has no impact on growth," Velarde said.
In this regard, he underscored the importance of the BCR's autonomy to prevent monetary policy decisions from responding to the political cycle.