Peru's central bank holds benchmark interest rate at 4.25%
Peru’s central bank kept its benchmark interest rate unchanged at 4.25% for the eighth consecutive meeting, citing persistent inflation at 4.01%—above its 1%-3% target—while projecting a return to 2% by 2027 as supply shocks ease. The decision follows April’s inflation dip but reflects concerns over global risks, including Middle East conflict-driven oil price volatility and upcoming presidential runoff elections in June.
Peru’s central bank maintained its benchmark interest rate at 4.25% for the eighth consecutive meeting, aligning with analyst expectations. The decision came after April’s inflation rate settled at 4.01%, exceeding the bank’s target range of 1%-3%, though it had eased from March’s three-decade high driven by energy shocks. The bank attributed recent inflation spikes to temporary supply-side factors and expects prices to return to its 2% target by 2027 as these pressures fade. Global economic conditions remain a concern, with elevated risks from the Middle East conflict causing financial market volatility and high international oil prices. Despite these challenges, the bank noted that global growth prospects for 2024 stay positive, benefiting Peru’s trade terms. The central bank emphasized that while external pressures persist, domestic inflation trends suggest a gradual normalization over time. Peruvians are set to vote in a presidential runoff election next month, with conservative candidate Keiko Fujimori and leftist Roberto Sanchez leading the first-round vote count. The final two candidates for the June runoff will be confirmed in the coming days. The central bank’s decision reflects a cautious approach amid both economic uncertainties and political transitions in the country.
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