Peru Maintains Key Rate Amid Global Trade War Concerns

Peru’s central bank held interest rates at 4.75% as analysts evaluate the effects of global trade wars on inflation. Concerns arose about the impact of U.S. trade policies on Peru’s exports, with 1.5% annual inflation noted in February. Economic growth is projected to be 3% this year, but strategies are being developed to prevent tariffs on key products.

On March 13, 2025, Peru’s central bank opted to maintain its key interest rate at 4.75%, aligning with the forecasts of seven out of eleven economists surveyed by Bloomberg. The decision comes as policymakers assess the implications of global trade tensions on inflation. Despite noting positive inflation trends within the country, the bank expressed concern over increased global economic risks linked to trade restrictions.

The central bank acknowledged significant volatility in financial markets, attributing these fluctuations to uncertainties surrounding foreign trade policies, particularly those enacted by the United States. In the context of an economy that has managed one of the lowest inflation rates among emerging markets, authorities have raised awareness regarding potential impacts of U.S. trade measures on Peru’s key exports such as metals and fruits.

As of February, Peru’s annual inflation was recorded at 1.5%, with predictions indicating a potential decrease to approximately 1% in March. The bank projects an economic growth rate of 3% for this year. In light of the ongoing trade discussions, key ministers have indicated that Peru is preparing to send a delegation to address potential tariffs on its copper exports, while also assuring that the agriculture sector, particularly blueberries and grapes, is less likely to be affected by U.S. tariffs. If necessary, Peru would seek intervention from the World Trade Organization to safeguard its agricultural exports.

In summary, Peru’s central bank has chosen to retain its interest rate amid rising global trade tensions, reflecting a cautious approach towards inflation. The nation’s robust economic growth and low inflation rates remain positive, yet the potential ramifications of U.S. trade policies on critical exports necessitate vigilance from the Peruvian government. With ongoing efforts to mitigate the effects of potential tariffs, Peru aims to protect its economy from external vulnerabilities.

Original Source: financialpost.com