Thursday, February 12, 2015

Peru holds rate, economic growth still below potential

    Peru's central bank maintained its monetary policy rate at 3.25 percent and said the latest data continued to show economic growth that remains below the country's potential.
    The Central Reserve Bank of Peru, which cut its rate by 25 basis points in January, added that it had cut the reserve requirement for February by a further 50 basis points to 8.50 percent and would consider "additional easing measures" if necessary.
    The central bank has been cutting the reserve requirement for domestic currency deposits since June 2014 and announced the latest reduction on Jan. 27.
    When the central bank surprised financial markets by cutting its policy rate on Jan. 15, it had said the move did not mean that it was embarking on a series of rate cuts.
    The central bank added that its decision to maintain its rate this month took into account the projection that inflation will converge toward its 2.0 percent target this year, below-potential economic activity, anchored inflation expectations and international data showing a mixed recovery of the global economy and greater volatility in financial and currency markets.
   Peru's consumer prices rose by 3.07 percent in January, down from 3.22 percent in December. Excluding food and energy, the bank said inflation eased to 2.48 percent in January from 2.48 percent in December.
    Last month the central bank cut its 2015 growth forecast to 4.8 percent from its December forecast of 5.2 to 5.5 percent.
     In its quarterly report, it also said Peru's economy likely grew by 2.4 percent in 2014, below its previous estimate of 2.6-3.0 percent, and well below 2013's 5.8 percent.


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