March 8, 2018 / 11:42 PM / in a year

UPDATE 1-Peru central bank cuts key rate, warns inflation to slow

(Adds quote from central bank and context)

LIMA, March 8 (Reuters) - Peru’s central bank cut the benchmark interest rate to 2.75 percent on Thursday and warned that inflation will likely fall below its target range this month because of supply shocks and weak economic growth.

Seven out of 10 economists polled by Reuters had forecast the 25-basis-point reduction to the key rate, with the remaining three expecting a hold.

The central bank aims to keep inflation between 1 and 3 percent, but said it will likely end March under 1 percent before gradually converging toward 2 percent in the future.

“On the other hand, measurements of inflationary trends continue to fall,” the bank said in a statement.

Peru’s inflation rate, which slipped to 1.18 percent in February, has not been below 1 percent since April 2010.

The central bank reiterated that it would watch inflationary data closely to consider modifications to its monetary stance if needed.

Economic growth in Peru slowed to 2.5 percent last year as corruption probes hit construction activity and political turmoil heightened uncertainty and slowed government spending.

Earlier on Thursday, opposition lawmakers launched a new bid to force the president from office over accusations he lied about his ties to a company at the center of a graft scandal.

Reporting by Lima Newsroom Editing by Chris Reese and Leslie Adler

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