Inflation in Peru will slow down and growth will remain strong, central bank says
LIMA, Oct. 8 (Reuters) – Peruvian consumer prices in October are expected to hover around 0.4%, their lowest in three months, the central bank said on Friday, as policymakers consider their next move after a recent round of interest rate hikes.
Adrian Armas, who heads economic studies for the central bank, said in a presentation the country’s economy is poised for double-digit growth as the world’s No.2 copper miner recovers lost ground as a result of the coronavirus crisis.
The bank on Thursday raised its interest rate to 1.5% from the previous 1%, its third consecutive rate hike, and said conditions pointed to a continuation of the expansionary policy, as part of a gradual withdrawal of stimulus measures, for an extended period as the global economy returns to normal. .
Several countries in the region recently increased their rates after lowering them to record levels during the pandemic, including Mexico, Brazil and Chile.
Armas said inflation in Peru had accelerated mainly due to external factors, including rising world prices for oil, wheat and corn. The Peruvian sol also depreciated by around 13% against the dollar, accentuating inflationary pressures.
“Inflation this year will likely be above the 4.9% we projected, but (…) next year’s inflation rates should be within the central bank’s target range” of 1% and 3%, he said.
The bank is also bullish on Peru’s economic growth and predicted double-digit year-on-year growth from the previous August.
“The third quarter is better than expected (…) taking this into account, we are seeing more growth than expected for this year,” he added. (Reporting by Marco Aquino; writing by Dave Sherwood; editing by Sandra Maler)