Peru left borrowing costs unchanged for a 12th straight month, holding its benchmark rate at 4.25% on Thursday, as expected by 14 analysts surveyed by Bloomberg. Only one economist had forecast a quarter-point increase to 4.5%.

The central bank said that much of the recent jump in inflation was due to higher fuel prices and their impact on transportation costs. "Both year-on-year inflation and inflation excluding food and energy are projected to return to the target range and settle at around 2 percent over the projection horizon, as the effects of the supply shocks that impacted inflation dissipate," the bank said in its policy statement.

Peru has had one of the lowest inflation rates in emerging markets in recent years. But consumer price increases have come in above the 3% top of the central bank's target range for the last six months, hitting 4.44% in August. Policymakers are closely monitoring inflation risks from the weather phenomenon known as El Niño and the war in the Middle East.

In a bid to help ease inflationary pressures, the administration of conservative Keiko Fujimori, who took office in July, rolled out a three-month subsidy for freight and passenger transport workers facing high fuel prices. The government also announced more than $260 million in funding to prepare for heavy rainfall and droughts linked to El Niño.