Peru Keeps 4.25% Rate After Central Bank’s Reserve Reductions
The board, which is led by bank President Julio Velarde, maintained the overnight rate at 4.25 percent, matching the forecasts of all 14 economists surveyed by Bloomberg. Peru ties Malaysia for the longest interest-rate pause in developing countries.
Policy makers cut reserve requirements Sept. 30 for a third straight month after lowering their 2013 growth forecast to 5.5 percent from 6.1 percent on weaker export revenue. The central bank will continue cutting reserve requirements this year to stimulate growth as inflation holds near the upper end of the central bank’s target range, said Mario Guerrero, an economist at Scotiabank Peru SAA.
“Interest rates will probably remain stable for a relatively long period, at least through the first half of next year,” said Guerrero in a phone interview from Lima. “The central bank is opting for changes in reserve requirements to bolster credit.”
The economy expanded 4.5 percent in July, less than the 4.8 percent forecast by analysts surveyed by Bloomberg. Growth has lagged behind economists’ estimates in seven of the last eight months.
Velarde said Sept. 30 the slowdown will prove temporary as exports rebound and business sentiment recovers, spurring 6.2 percent economic growth in 2014, the fastest in South America.
Exports rose 1.2 percent in August, the first increase this year, after a surge in shipments of copper offset lower prices for the country’s biggest export, Peru’s statistics agency said today in a report on its website.
Consumer prices increased 0.11 percent in September, the slowest pace in seven months, while the annual inflation rate fell to 2.83 percent from 3.28 percent in August. The central bank targets inflation of 1 percent to 3 percent.
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