Thursday, December 9, 2021

Peru raises rate 5th time, stimulus gradually withdrawn

     Peru's central bank raised its key interest rate for the fifth month in a row and reiterated it will maintain the current expansionary monetary policy stance for some time as monetary stimulus is only being withdrawn gradually.
     The Central Reserve Bank of Peru (BCRP) raised its reference rate by another 50 basis points to 2.50 percent and has now raised by a total of 2.25 percentage points following rate hikes in August, September, October, November and today.
      As in previous months, the bank's board said today's rate hike does not imply a cycle of successive rate increases and confirmed it still expects inflation to return to its target range in the second half of next year as temporary factors reverse and economic activity remains below its potential.
     Peru's inflation rate declined to 5.66 percent in November from 5.83 percent in October but inflation expectations 12 months ahead rose to 3.7 percent from 3.6 percent and for 2022 they are 3.5 percent, above BCRP's target range of 2.0 percent, plus/minus 1 percentage point.


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