(Bloomberg) — Peru is set to keep its benchmark interest rate unchanged for a second straight month on Thursday as the central bank’s preferred measure of inflation remains elevated.
Policymakers will keep rates unchanged at 5.75%, according to 10 of 12 analysts surveyed by Bloomberg. Two of them predict a quarter-point cut. Peru has cut rates most of the time since last September, when they peaked at 7.75%.
Headline inflation in Peru remains the lowest among Latin America’s major economies and is within the target range. Central bank President Julio Velarde, however, said he was paying close attention to pressure on a core price indicator that excludes food and energy. Countries such as Mexico and Brazil have also struck a cautious tone, keeping borrowing costs unchanged recently.
What Bloomberg Economics says
“Peru’s central bank is expected to keep its policy rate at 5.75% for the second consecutive time. We expect policymakers to leave the door open to further action and reiterate that future decisions will depend on new data. Persistent underlying inflation, the recovery in activity and currency depreciation support our forecasts.”
— Felipe Hernandez, Latin America economist
— Click here for the full report
Core inflation in Peru remained above 3% in June compared to a year earlier, above the headline figure of 2.29%. The central bank maintains a target range for consumer price growth of between 1% and 3%.
The Andean nation’s economy has also grown faster than expected after last year’s recession, which could further reduce the need for short-term interest rate cuts.
Economic activity grew 5.3% in April compared to the same month a year earlier and is expected to grow 4.5% to 5% in May, according to the Finance Ministry. Peru’s national statistics agency will release May figures next week.
–With the assistance of Rafael Gayol and Giovanna Serafim.
©2024 Bloomberg LP
