Thursday, February 13, 2014

Peru holds rate, cuts reserve requirements again

    Peru's central bank maintained its monetary policy reference rate at 4.0 percent but again lowered the reserve requirements on the domestic soles currency by 100 basis points to 13 percent and said that it would "implement additional measures to ease its monetary policy instruments" if necessary.
    The Central Bank of Peru (BCRP), which cuts it rate by 25 basis points in November as a preventative move, also said the economy slowed down until the third quarter of last year but indicators and surveys about expectations "show a recovery of economic activity in the first quarter of this year."
    Peru's Gross Domestic Product rose by 0.8 percent in the third quarter of last year from the second quarter for annual growth of 4.4 percent, down from the second quarter's 5.6 percent.
    Economic growth remains below the country's potential while inflation expectations remain anchored within the central bank's target range of 1.0 to 3.0 percent with a 2.0 percent midpoint.
    Peru's inflation rate rose to 3.07 percent in January from December's 2.86 percent and an average 2013 rate of 2.86 percent. The bank said the current reference rate of 4.0 percent was compatible with an inflation forecast of 2 percent in the 2014-2015 horizon.


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