Peru’s central bank kept interest rates at 4.75% as they evaluate inflation risks from global trade wars. Despite positive local inflation trends and strong economic growth, concerns persist regarding U.S. trade policies affecting exports. Annual inflation slowed to 1.5% in February, with expectations of further decline this month.
On Thursday, Peru’s central bank maintained its key interest rate at 4.75%, as they assess the inflationary implications of global trade conflicts. This decision aligns with the expectations of seven out of eleven economists surveyed by Bloomberg, while four anticipated a reduction to 4.5%. The bank acknowledged positive local inflation trends but acknowledged increased global economic risks stemming from uncertainties related to restrictive foreign trade measures.
The central bank expressed concerns regarding substantial financial market volatility observed in the current environment. Despite possessing one of the lowest inflation rates among emerging markets and experiencing growth surpassing regional competitors, Peruvian authorities recognize the potential ramifications of U.S. trade policies on the nation’s metal and fruit exports.
In February, Peru recorded an annual inflation rate decrease to 1.5%. The central bank reiterated its expectation for inflation to further decline to approximately 1% in the upcoming month. Additionally, they project the country’s economic expansion to reach 3% for this year. Energy and Mines Minister Jorge Montero indicated that Peru is organizing a delegation to prevent tariffs on copper exports, while Agriculture Minister Angel Manero suggested it is improbable that the U.S. will impose tariffs on Peruvian crops, although they are prepared to engage the World Trade Organization if necessary.
In summary, the Bank of Peru’s decision to maintain interest rates reflects caution amidst global trade tensions. With inflation currently low and economic growth favorable, the authorities remain vigilant regarding potential impacts from U.S. trade policies on exports. The coordinated efforts from various ministers underscore the country’s proactive stance in navigating these economic challenges.
Original Source: www.livemint.com
