Thursday, October 11, 2018

Peru maintains rate and expansive policy stance

     Peru's central bank left its monetary policy rate at 2.75 percent, saying its board considers it appropriate to maintain an expansive policy stance until it is confident inflation will converge to its target and that inflation expectations are anchored at a level where economic activity is close to the country's potential.
      The Central Reserve Bank of Peru (BCRP), which has maintained its rate since cutting it in March, added inflation is projected to remain within the target range in October and then converge to 2.0 percent in the short term.
      Between May 2017 and March this year BCRP cut its key rate by 150 basis points.
      Peru's inflation rate rose to 1.28 percent in September from 1.07 percent in August, within the central bank's target range of 1.0 - 3.0 percent.
      Some indicators of economic activity showed signs of a temporary drop in dynamism overall the indicators show a gradual recovery and business expectations were optimistic in September.
      Last month BCRP President Julio Velarde signaled that interest rates would likely not be raised until next year unless an expectedly strong economy pushes up prices.
      Peru, the world's second largest copper producer,  has been affected by lower copper prices and in its latest quarterly report the BCRP lowered its forecast for 2019 economic growth to 4 percent from a previous forecast of 4.2 percent.
      The 2018 growth forecast was maintained at 4.0 percent and in the second quarter of this year Peru's gross domestic product grew by an annual 5.4. percent, up from 3.1 percent in the first quarter and the fastest growth rate since the fourth quarter of 2013.


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