July 12, 2018 / 11:32 PM / 2 months ago

UPDATE 1-Peru's central bank keeps benchmark rate at 2.75 pct as expected

(Adds comment from bank about risks to global growth, context)

LIMA, July 12 (Reuters) - Peru’s central bank kept the benchmark interest rate at 2.75 percent for the fifth consecutive month on Thursday as expected, citing recovering inflation and signs of more dynamic economic activity despite risks to global growth caused by trade tensions.

All twelve analysts forecast the rate hold in a Reuters poll.

Last year, Peru’s economic growth slowed sharply as inflation slowed to well under the central bank’s target range. But price increases and economic growth have picked up in recent months.

There were “clear signs of greater dynamism” in economic activity, the central bank said, but it noted for the first time that there were growing risks to global growth and financial volatility because of trade tensions.

The central bank added in a statement that it would likely keep its current “expansive” monetary policy until inflation converges to its goal of 2 percent and economic growth resumes its potential annual growth rate of 3.5 percent.

Inflation rose to 1.43 percent last month, inside the central bank’s 1 to 3 percent annual target.

The central bank and the finance minister expect the annual economic growth rate to rise to 4 percent by the end of the year, from 2.69 percent in March, the last month for which official growth data has been reported.

So far this year, the sol currency has depreciated 1.08 percent against the dollar so far this year amid rising U.S. interest rates. (Reporting by Mitra Taj; Editing by Phil Berlowitz and Grant McCool)

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