Peru has held its key interest rate at 4.75% while monitoring the effects of global trade wars. Policymakers noted local inflation stability but acknowledged rising global economic risks. Peru’s inflation rate stands at 1.5%, with a forecast of 3% economic growth for the year, and officials are preparing to mitigate potential trade tariffs.
Peru has decided to keep its key interest rate at 4.75%, avoiding any changes as policymakers assess the potential inflationary effects triggered by global trade disputes. This decision aligns with the expectations of seven out of eleven economists surveyed by Bloomberg, while four anticipated a reduction to 4.5%. The central bank acknowledged positive local inflation metrics but expressed concern over increased global economic risks attributed to uncertainties surrounding foreign trade restrictions.
In its statement, the central bank highlighted the observed financial market volatility within the current context. Despite Peru maintaining one of the lowest inflation rates among emerging markets alongside strong economic growth, officials recognize the potential repercussions of U.S. President Trump’s trade policies on Peru’s economy. These policies could particularly impact sectors such as metal and fruit exports.
As of February, Peru recorded an annual inflation rate of 1.5%, with expectations for this to decline to about 1% later this month. The central bank also predicts a 3% economic growth rate for the year. Energy and Mines Minister Jorge Montero announced plans for a delegation aimed at preventing tariffs on copper exports. Meanwhile, Agriculture Minister Angel Manero remains optimistic that U.S. tariffs will not affect Peruvian crops like blueberries and grapes, although the country is prepared to challenge any adverse measures through the World Trade Organization.
In summary, Peru’s decision to maintain its interest rates reflects a cautious approach amid rising global trade tensions. With stable inflation rates and predicted economic growth, the Peruvian government is preparing to address potential challenges posed by U.S. trade policies, specifically regarding the export of copper and agricultural products. The country’s leadership is proactively seeking to protect its economic interests within the global trade landscape.
Original Source: financialpost.com
