Peru Central Bank Maintains Benchmark Interest Rate at 4.75%

Peru’s central bank maintained its benchmark interest rate at 4.75%, following a gradual reduction from 7.75% since September 2023. Inflation ended 2024 at 1.97%, within the target range. Core inflation is expected to follow downward trends, while global uncertainties persist.

On Thursday, the central bank of Peru decided to maintain its benchmark interest rate at 4.75%, aligning with analysts’ predictions. Since September 2023, the bank has been gradually reducing this rate from a previous high of 7.75%, which had been maintained in the earlier part of the year. Peru is noted for having one of the lowest benchmark interest rates in Latin America.

As for inflation, it concluded 2024 at 1.97%, remaining within the central bank’s target range of approximately 2%, allowing for a margin of one percentage point. In January, there was a slight monthly decrease in consumer prices of 0.09%, following a 0.11% increase in December.

The central bank’s statement suggested that it anticipates annual inflation will approach the lower threshold of the target range in the forthcoming months. Additionally, core inflation—excluding volatile food and energy prices—is expected to trend down towards the center of this range.

The recent decision follows a reduction of 25 basis points earlier in January, as the bank indicated that this adjustment placed the rate in what it considers “neutral territory.” Future modifications will depend on incoming data regarding inflation and its components. Furthermore, the central bank acknowledged ongoing global uncertainties related to trade policies and risks stemming from international conflicts.

In summary, the central bank of Peru has sustained its benchmark interest rate at 4.75%, reflecting a strategic approach to economic conditions. With a low inflation rate and expectations of continued stabilization, the bank remains cautious of global economic uncertainties. Future adjustments will be informed by evolving inflation data.

Original Source: www.tradingview.com