Nov. 6 (Bloomberg) -- Peru’s central bank will keep its benchmark interest rate at 1.25 percent in the “coming months” as the economy recovers without stoking inflation, bank research director Adrian Armas said today.

The annual inflation rate will remain below 1 percent until March or April, Armas said. Consumer prices rose 0.71 percent last month from a year earlier, the slowest pace since April 2007 and below the bank’s 1 percent to 3 percent target range.

“Gross domestic product has been in clear recovery since July,” Armas said on a conference call. “The decision to keep rates unchanged is based on low expectations for inflation.”

The bank yesterday kept its reference rate unchanged for a third month on signs the economy will grow in the fourth quarter, Armas said. Growth accelerated in September on rising fishing catches, cement and electricity production as seven interest rate cuts earlier this year boosted consumer demand.

The Peruvian sol declined 0.1 percent to 2.8990 per dollar today from 2.8955 yesterday. The sol has gained 8.1 percent this year, the seventh-best performance against the dollar among 26 emerging-market currencies tracked by Bloomberg.

To contact the reporter on this story: John Quigley in Lima at jquigley8@bloomberg.net

Last Updated: November 6, 2009 15:05 EST