Peru unexpectedly left borrowing costs unchanged for a 13th straight month as policymakers expect a recent acceleration in inflation to prove temporary. The central bank, led by veteran Governor Julio Velarde, held its key rate at 4.25% on Wednesday. The decision surprised nine of the 13 economists surveyed by Bloomberg who had expected a quarter-point hike, while only four forecast no change.
The bank said it remains attentive to inflation data and emphasized its commitment to take necessary actions to bring inflation to target. Peru is one of Latin America’s top performing economies, but inflation has remained above the 3% top of the central bank’s target range for seven straight months. In September, consumer prices rose 4.55%, their fastest pace since 2023.
Velarde said last month that policymakers couldn’t rule out raising the benchmark rate, with any move depending on El Niño weather developments. Unusual heat and warmer sea temperatures are hurting fishing and crop yields, while heavy rains and flooding threaten infrastructure. The central bank targets annual inflation of 1% to 3%, with Velarde expecting inflation to end the year at 4.2% before returning to target in 2027.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing