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Bloomberg
Peru raised interest rates for a fifth straight month as the economy grows at the fastest pace in Latin America and inflation exceeds the upper limit of its target range.
The central bank lifted its key interest rate by half a percentage point to 2.5%, in line with forecasts by all nine economists from Bloomberg. The move unwound all rate cuts implemented after the pandemic hit last year.
“We judge that it is appropriate to maintain an expansionary monetary stance for a prolonged period, through the gradual withdrawal of monetary stimulus,†the bank said in its statement.
Central banks in Brazil, Mexico, Chile and Colombia have also been withdrawing stimulus at recent meetings to curb inflation pressures as their economies rebound from the pandemic. Brazil this week delivered its second-straight rate increase of 1.5 percentage point and signaled more to come.
Peru last year suffered one of the world’s most lethal and economically-destructive Covid-19 outbreaks, leading to an aggressive easing cycle that took the benchmark rate to a record low of 0.25%. But now the nation is enjoying the region’s fastest recovery, even amid political turmoil.