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Peru holds interest rate at 3.25%

The Banco Central de Reserva del Perú maintained its monetary policy interest rate at 3.25%, citing decreasing inflation and faster national and global economic growth.

The central bank also kept the overnight deposit rate at 2.00%, as well as the current rates for direct repos and rediscount operations and swaps.

It expects inflation, which continued to fall in November within the inflation target, to slide further in the coming months to arrive at 2.0% by the end of 2018. The declining measurements of inflation trends should stay within the target range in 2017 and 2018, it added.

Economic activity has expanded at a faster clip due to higher public and private expenditure, the bank said, but remains below its potential level of growth. Business optimism has also held up.

The bank said it is keeping a close eye on inflation and will make additional adjustments to the monetary policy if necessary.

Peru cut its key interest rate in November by 25 basis points to 3.25%.