LIMA Dec 6 Peru's central bank on Thursday held
its benchmark interest rate steady at 4.25 percent
for the 19th straight month, as inflation has cooled to within
its target range even as the economy hurtles along at 6 percent
rate of growth.
All 14 economists surveyed by Reuters had predicted the
monetary authority would once again keep the rate unchanged.
Annual inflation in November slowed to 2.66 percent, within
the central bank's 1 percent to 3 percent target range.
The central bank now seems more worried about the effect of
the wobbly global economy on Peru's swift expansion than about
inflation getting out of hand.
"This decision reflects the fact that inflation continues to
decline, having returned to the target range as supply shocks
partially reversed, in a context of domestic economic growth
that is close to its potential and an external environment that
is still highly uncertain," the central bank said.
Seasonal price spikes for locally grown foods and external
shocks had pushed inflation up to 3.74 percent in the 12 months
through September, but consumer prices dropped in both November
The economy expanded 6.3 percent in the first three quarters
of 2012. Peru's potential growth rate, the maximum rate 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 bank reserve
requirements four times this year to discourage speculative
capital inflows and to slow a rapid credit expansion.
The country is a top exporter of minerals, which drive 60
percent of its international shipments. But exports have slumped
in recent months, and domestic lending, consumption and
construction are now fueling expansion.