The Board of Directors of the
Central Reserve Bank of Peru (BCR) has decided to continue with an expansionary monetary policy, setting the benchmark interest rate at 0.50%.
"Thus, the real interest rate of monetary policy is maintained at historical lows," the issuing entity pointed out.
This decision was taken considering that the
year-on-year inflation rate increased from 3.25% in June to 3.81% in July, being temporarily above the target range due to factors such as the increase in international prices of food and fuel, as well as the exchange rate.
Likewise, trend inflation remains around the center of the target range, while year-on-year core inflation was 2.14% in July.
The Central Bank estimated that inflation will return to the target range in the next 12 months and remain within that range for the rest of next year.
This estimate is based on the reversal of the effects of transitory factors on the inflation rate (exchange rate, fuel and grain prices in international markets) and that economic activity will remain below its potential level.
The bank stated that one-year-ahead expected inflation increased from 2.6% in June to 3% in July this year, upper limit of the inflation target range.
On the other hand, it indicated that most leading indicators and expectations about the economy remain pessimistic in July.
"Global economic recovery is expected to be more pronounced in the next quarters, as the vaccination process continues around the world, and significant stimulus packages are implemented in developed countries," the BCR noted.
Expansionary stance
Additionally, the Board considers it appropriate to maintain an expansionary stance as long as the negative effects of the pandemic on inflation and its determinants persist.
Furthermore, it is especially attentive to new information referring to inflation expectations and the evolution of economic activity to consider, if necessary, changes in the monetary policy position.
"The BCR will continue to take the necessary steps to sustain the payments system and credit flows," it added.
Financial markets were highly volatile in a context of uncertainty and the BCR's actions were intended to mitigate this volatility.
(END) NDP/RMB/MVB
Publicado: 13/8/2021