LIMA Feb 8 An official at Peru's central bank
said on Friday that if annual inflation cools to 2 percent as
expected in coming months "the conditions would be created" for
lowering the interest rate, which the bank has held steady for
21 straight months.
"If that happens, the conditions would be created to reduce
the benchmark interest rate," said Adrian Armas, the central
bank's manager of economic studies, referring to a drop in the
The possibility of lowering the interest rate comes as the
central bank struggles to soften the impact of heavy capital
inflows as the local sol currency trades around a
16-year high. A lower interest rate could make the sol less
The monetary authority also said it would again raise the
ceiling on foreign investments for the country's private pension
funds, which manage some $30 billion in assets, from 32 percent
to 34 percent - in a bid to encourage dollar outflows.
Inflation for the 12 months through January was 2.87
percent, within the 1-3 percent target range.
While the central bank has not changed the 4.25 percent
benchmark interest rate in more than a year and a half, it has
intervened heavily in the local spot currency market and
tightened reserve requirements on banks six times since May.
In 2012 the central bank bought a record $13.9 billion as
the sol gained 5.72 percent against the dollar, helped by
stimulus measures abroad and Peru's solid economic growth.