Peru Surprises, Keeps Lowest Rate Among Big Regional Peers

[ad_1]

(Bloomberg) -- Peru surprisingly held its benchmark interest rate unchanged Thursday as the economy grows above expectations and borrowing costs already rank as the lowest among Latin America’s major economies.

Most Read from Bloomberg

The central bank held its benchmark rate at 5.25%, which last month marked a two-year low, as forecast by just two of 12 analysts surveyed by Bloomberg. Five of the bank’s last eight rate decision have been unexpected.

Peru’s inflation surprisingly cooled down to 1.78% last month — the first reading below 2% since 2020 — which led analysts to strongly believe that a third straight cut was on the horizon. The bank targets annual inflation of between 1% and 3%, and price increases in Peru have stayed within the band for six months now.

The bank said in a statement published after the interest rate decision that inflation would remain within the target band but that it would increase slightly in the fourth quarter due to base effects.

Peru has the lowest inflation among Latin America’s major economies and also among much larger nations like the US and the UK. Under Velarde’s leadership, Peru’s monetary policy has often performed better than its peers, with lower inflation and a more stable currency.

The country’s benchmark rate is slightly higher than the upper bound of the Federal Funds Rate, which is normally seen as a floor for emerging market economies. But Velarde has suggested in the past that he is not too concerned about the Fed, saying he could cut rates to as much as 1 percentage-point below the US.

Peru’s economy has also been growing faster than expected, most recently rising 4.47% in July. Peru’s statistics agency will release economic activity figures for August next week.

(Adds details of bank’s unexpected decisions in second paragraph. An earlier version corrected the headline on the chart)

M	T	W	T	F	S	S
1	2	3	4	5	6	7
8	9	10	11	12	13	14
15	16	17	18	19	20	21
22	23	24	25	26	27	28
29	30	31

Peru Surprises, Keeps Lowest Rate Among Big Regional Peers

Migration through Darien Gap increased in September, led by Venezuelans after the election

Brazil 2-1 Chile (Oct 10, 2024) Game Analysis

Brazil 2-1 Chile (Oct 10, 2024) Game Analysis

Why the United States Can’t Afford to Ignore Haiti’s Collapse: Key Questions – CSIS | Center for Strategic and International Studies

Unpacking the Controversy: Trump’s Aid Threat and Its Impact on Honduras’ Election

Jamaica Secures a Transformative $6.7 Billion Recovery Package!

Jordan Morris Dazzles with Two Goals in Exciting US Men’s Team Triumph Against Martinique!

Unlock Incredible Airline Discounts: Your Ultimate Guide to Winter Holiday Travel with the US, Brazil, Mexico, and France!

Trump’s Decision to End Humanitarian Parole: A Game Changer for Thousands of Migrants from Four Nations

Unveiling the Visionary Leaders Shaping Montserrat’s Future

US Troops Intensify Combat Drills in Panama as Venezuela Tensions Escalate

Epic Clash: Brazil and Paraguay Set for an Unforgettable Showdown!

Alarm Bells Ring: DENV-3 Raises Fears of Widespread Dengue Outbreaks in the Americas

Categories

Archives