By Central Bank News
The central bank of Peru held its benchmark interest rate steady at 4.25 percent, as widely expected, saying an increase in inflation reflected temporary supply issues while domestic growth was close to the country’s potential.
Central Reserve Bank of Peru (BCRP), which has kept rates unchanged since April 2011, said economic growth had stabilized around its long-run sustainable level but some of the export-linked areas had shown some weakness and there was increased uncertainty about global economic growth.
Peru’s Gross Domestic Product expanded by an annual rate of 6.1 percent in the second quarter, the same rate as in the first quarter.
The country is expected to be the fastest growing country in South America this year and 2013 with the central bank forecasting growth of 6 percent in 2012 and 2013, slightly down from 2011’s 6.9 percent expansion.
The inflation rate in September rose 0.54 percent from the previous month for an annual rate of 3.7 percent, up from 3.5 percent in August, with the cost of perishable items, such as potatoes, driving up prices.
Excluding food and energy, the central bank said prices were practically stable and only up 2.14 percent in the last year.
“Despite these factors, we estimate a gradual convergence of inflation to the target range in the coming months,” BCRP said.
The central bank targets annual inflation of 2 percent, plus/minus one percentage point. Inflation has exceeded the top of the range since June 2011.
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