UPDATE 1-Peru keeps benchmark rate at 4.25 pct for 23rd month

Thu Apr 11, 2013 7:26pm EDT

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LIMA, April 11 (Reuters) - Peru's central bank held its benchmark interest rate steady at 4.25 percent for the 23rd straight month on Thursday, as inflation is within the target range and the economy expands near its potential.

All 13 economists surveyed by Reuters had predicted the monetary authority would once again keep the rate unchanged.

The decision to hold the rates came despite a spike in consumer prices in March of 0.91 percent. That was the highest monthly rate for March in years.

Nonetheless, inflation for the 12 months through March was 2.59 percent - within the central bank's target range of 1 percent to 3 percent.

"Inflation is projected to converge to the center of the target range in coming months due to better supply conditions for food, a rate of productive activity close to its potential, and inflation expectations anchored within the target range - even given persistent signs of weak global activity," the central bank said in a statement.

The economy expanded 6.15 percent in January from the same month a year ago and 6.3 percent in all of 2012 - one of the fastest paces in Latin America.

A similar expansion is expected this year.

Growth in Peru in the past few years has been led by strong domestic demand that has offset weaker mineral exports.

Peru's potential growth rate, the maximum rate that the economy can expand without provoking excessive inflation, is normally seen around 6 percent or 6.5 percent.

The central bank has described its current monetary stance as slightly tighter than neutral. It has raised reserve requirements for banks repeatedly to discourage speculative capital inflows as its currency trades around historic highs.

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