In a “preventative” measure to tackle inflation and inflation expectations, Peru’s central bank has raised rates 25 basis points for the third consecutive month. The reference interest rate now stands at 3.75 per cent.
The move was widely expected given rising – but still moderate – inflation pressures. Annual inflation to February was 2.23 per cent. Month-on-month the increase was 0.38, just below January’s monthly increase of 0.39, which was the highest in two years. The Bank’s target is to keep inflation below 3 per cent. The central bank has indicated that monetary policy remains accommodative at 3.75 per cent, and that 4.5 per cent would be more “neutral”, suggesting further rises lie ahead. There might be a pause at the next meeting, however, given moderate and tempering inflation.