Peru: Central Bank keeps benchmark interest rate at 2.75%

10:53 | Lima, Jun. 14.

Peru's Central Reserve Bank (BCR) decided to maintain its benchmark interest rate at 2.75% after assessing different factors, it said in a recent statement.

According to the financial entity, the year-on-year inflation rate and inflation trend indicators as of May were within its target range.

On the other hand, the one-year ahead expected inflation rate as of May was 2.47%.

The primary economic activity indicators show a negative performance as a result of temporary supply shocks, while the non-primary economic activity shows signs of moderate dynamism mainly because of a reduction in the implementation of public investment, which is expected to revert in the second half of the year.

Global growth risks remain tilted to the downside, and trade tensions have intensified in recent weeks, thereby exacerbating international financial volatility.

The BCR stated that year-on-year inflation is expected to remain within its target range and to average 2% over the forecast horizon. 

Plus, its Board of Directors considers that it is appropriate to maintain an expansionary stance as long as inflation expectations remain anchored and economic activity is below its potential level.

According to recent inflation and economic activity indicators: 

i. The monthly inflation rate was 0.15% (2.73% year-on-year) in May 2019. The same rate excluding food and energy was 0.14% (remained at 2.60% year-on-year) in such month. 

ii. Business expectation indicators moderated in the fifth month of the year but remain on the optimistic side. Likewise, non-primary economic activity indicators continue pointing to a gradual closure of the output gap.


Published: 6/14/2019