Peru’s Central Bank Lowers Interest Rate

LIMA (Reuters) – Peru’s central bank has reduced its benchmark interest rate by 25 basis points to 4.75% on Thursday, which surprised many analysts who expected the rate to remain steady at 5%.

Since September 2023, the country has gradually lowered the key lending rate from a previous high of 7.75%.

In its statement, the central bank indicated that this reduction brings the rate to a “neutral” level, emphasizing that future adjustments will depend on new data regarding inflation and its derivatives.

This decision follows a slight increase in December’s inflation rate, which rose by 0.11% month-on-month. The annual price increase last year was recorded at 1.97%, within the bank’s target range of 2% +/- 1 percentage point.

The current figures reflect a significant decrease from the 3.24% annual inflation rate in 2023 and 8.46% in 2022, with December’s annualized rate also lower than the 2.27% from the previous month.

Peru now enjoys one of the lowest benchmark interest rates in Latin America.