Peru’s central bank raised its benchmark rate by 25 basis points to 4.50 percent in its November 12 decision. Annual inflation accelerated to 5.3 percent in October, driven mainly by food and energy prices. The bank said the move did not necessarily begin consecutive increases and would assess further steps against incoming economic and inflation data.
Peru’s Central Reserve Bank raised its benchmark interest rate by 25 basis points, a quarter of a percentage point, from 4.25 percent to 4.50 percent in its November 12 decision.[1], [2]
The bank cited supply shocks, higher inflation expectations and strong domestic demand. It said the move does not necessarily begin consecutive increases. Further changes will depend on inflation, expectations, economic activity and how long supply shocks persist.[1]
Annual inflation accelerated from 4.5 percent in September to 5.3 percent in October, with food and energy prices contributing most. Monthly inflation was 0.57 percent. Annual inflation excluding food and energy rose from 4.5 percent to 4.6 percent, with a monthly increase of 0.16 percent. Twelve-month inflation expectations remained at 3.1 percent, slightly above the ceiling of the central bank’s target range.[1]
The central bank expects inflation to converge toward 2 percent as supply shocks fade, but warned that El Niño and Middle East tensions could prolong price pressures. Most leading activity indicators remained strong in October. Expectations indicators fell from the previous month but stayed in optimistic territory. The board’s next monetary policy meeting is scheduled for December 10, when it will assess the incoming evidence before considering any additional adjustment.[1]
