LIMA: Peru's central bank will hold its benchmark interest rate at 3.25 percent on Thursday to avoid stoking seasonal inflation risks at a time of anaemic economic growth, said a majority of analysts polled by Reuters. Fourteen out of the 16 foreign and local economists surveyed said the central bank would leave the key rate unchanged for the third month in a row.
The remaining two forecast a 0.25 percent rate cut to boost growth.
Consumer prices in Peru rose 0.76 percent in March, pushing the annual rate to 3.02 percent, fractionally above the upper limit of the central bank's 1 percent to 3 percent target range, after torrential rains and landslides squeezed food supplies.
"While inflation expectations remain anchored around the target range, the pace of short-term inflation was pushed up by short-term factors, and will continue at that pace in April, leaving less space for a new monetary expansion,
"said Mario Guerrero, chief monetary economist at Scotiabank. The bank cut the reserve requirement of commercial banks by 50 basis points to 7.5 percent this month to increase lending in the local Sol currency, dampening the need for a fourth rate cut since July.
Peru's central bank has said it prefers loosening the reserve floor to lowering the benchmark rate as a way of stimulating economic activity.
It has gradually lowered the reserve requirement for deposits in soles since mid-2013.
The central bank last cut the rate by 25 basis points in January.
Peru's economy has been growing at its weakest pace since 2009, and a recovery forecast by the government and central bank has remained elusive over the past year. Gross domestic product rose 2.35 percent last year, following growth rates that tended to top 6 percent amid a mining boom in the previous decade.
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