By www.CentralBankNews.info The central bank of Peru held its monetary policy reference steady at 4.25 percent, as expected, saying inflation continues to ease and economic growth is close to the country’s potential growth rate.
The Central Reserve Bank of Peru (BCRP), which has held interest rates unchanged since April 2011, said inflation in 2013 should gradually converge to the bank’s 2.0 percent target due to “the improvement of food supply conditions and due to a pace of growth of economic activity close to the economy’s level of potential output, in a context in which global economic activity continues to show weak indicators.”
Peru’s headline inflation rate eased to 2.65 percent in December from 2.7 percent in November and core inflation rose by 3.27 percent in the last 12 months, the bank said. Excluding food and energy, inflation was an annual 1.91 percent in December.
Last month the BCRP also said it expected inflation to decline to around 2 percent in 2013.
The bank also said Peru’s economy has stabilized around its long-term sustainable level of growth although the export sector is still registering a weak performance, also the same observation that the central bank made in December.
In the third quarter, Peru’s Gross Domestic Product rose by an annual rate of 6.5 percent, up from 6.3 percent in the second quarter.
Peru’s central bank held its monetary policy reference interest rate unchanged at 4.25 percent, as widely expected, as inflation has continued to decline and is now within the bank’s target range.
The Central Reserve Bank of Peru (BCRP), which has held its rates steady since April last year, said it expects “this trend to be maintained in 2013, with inflation gradually converging to 2 percent.”
The central bank targets inflation of 1-3 percent and its president, Julio Velarde, recently said inflation should remain mild in December, with the rate ending this year around 2.8 percent and the declining further to around 2 percent in 2013.
Velarde also forecast that the economy is expected to grow around 6 percent in 2013, similar to 2012. In 2011 Peru’s Gross Domestic Product rose 6.9 percent.
Peru’s inflation rate slowed to 2.66 percent in November from 3.25 percent in October due to a decline in the cost of perishable foods, reversing earlier price rises.
Peru’s GDP expanded by 2.2 percent in the second quarter from the first for an annual growth rate of 6.1 percent, the same as in the first quarter and one of the highest growth worldwide on the back of investments in infrastructure and mining projects.
The central bank said economic growth had stabilized around its long-run sustainable level but activity linked to export markets were weak.