Peru Central Bank Maintains Benchmark Interest Rate at 4.75%

Peru’s central bank maintained its benchmark interest rate at 4.75%, having gradually reduced it from 7.75% since September 2023. The inflation rate ended 2024 at 1.97%, within the target range. Future changes will depend on inflation data, amid global economic uncertainties.

On Thursday, Peru’s central bank decided to maintain its benchmark interest rate at 4.75%, aligning with analyst forecasts. This marks a significant reduction from a high of 7.75% experienced earlier in 2023, as the central bank has gradually eased the lending rate since September.

Peru’s benchmark interest rate is one of the lowest in Latin America. The inflation rate concluded 2024 at 1.97%, comfortably within the central bank’s target range of approximately 2%, plus or minus one percentage point. In January, consumer prices experienced a slight drop of 0.09% on a monthly basis after a marginal increase of 0.11% in December.

The central bank anticipates that annual inflation will approach the lower limit of the target range in the near future. Additionally, core inflation, which excludes volatile food and energy prices, is expected to continue its downward trend towards the target center.

This decision follows a previous reduction of 25 basis points in early January, which the central bank regarded as placing the rate in “neutral territory.” Future adjustments will depend on new inflation data. In its recent statement, the central bank expressed concern about global uncertainties, particularly regarding the effects of trade policies and international conflicts.

In conclusion, the Peruvian central bank’s decision to hold its benchmark interest rate at 4.75% reflects a careful approach following a series of reductions in 2023. With an inflation rate stable within target limits and expectations of continued easing in core inflation, the bank remains vigilant amidst global economic uncertainties. This strategic stance illustrates the bank’s commitment to balancing economic growth and price stability.

Original Source: www.tradingview.com