Guide Central Reserve Bank of Peru (BCR) It agreed to raise the benchmark interest rate from 4% to 4.50%, while continuing to normalize the position of monetary policy.
According to a statement, the twelve-month inflation rate was taken into account for this decision, which rose from 6.15% in February to 6.82% in March, which is higher than the target range due to the return of high global food prices. supplies and fuel.
Meanwhile, the 12-month inflation rate excluding food and energy also rose, albeit to a lesser degree, from 3.26% in February to 3.46% in March, above the upper end of the inflation target range.
“The sharp increase in international energy and food prices since the second half of last year, recently exacerbated by international conflicts, has led to a sharp increase in global inflation rates. in amounts not seen for many years in the advanced economies and in the region. With this, inflation is expected to return to the target range between the second and third quarters of next year‘, the monetary entity.
The Bank of Bahrain and Kuwait indicated that the downward path of inflation on an annual basis will start in July of this year, due to the beginning of the reflection of the impact of various factors on the inflation rate and its expectations (exchange rate, international fuel and grains). prices), because economic activity will remain below its potential level.
Another factor is that inflation expectations to twelve months from 3.75% to 4.39% above the upper end of the inflation target range.
In addition, most indicators of the outlook for the economy deteriorated in March.
In the international environment, BCR notes that global economic activity has recovered, albeit at a slower pace due to the impact of COVID-19, due to continuing bottlenecks in the global supply of goods and services and the relative uncertainty associated with the rate of reversal of monetary stimuli in advanced economies.
However, recent international conflicts have raised uncertainty about the recovery of the global economy and the magnitude of upward pressure on commodity prices.
In addition, the monetary entity’s board of directors stated that it is keen on new information related to inflation and its determinants, including the development of inflation expectations and economic activity, to consider additional adjustments in the position of monetary policy that ensure the return of inflation to the target range on the projection horizon.
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