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Peru central bank keeps policy rate at 2.75%

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Peru central bank keeps policy rate at 2.75%

Peru's central bank maintained its policy rate at 2.75%, noting that inflation in July was within its target range and citing greater risks from trade tensions that could affect global growth.

Banco Central de Reserva del Perú also held the overnight deposit rates at 1.50%.

The central bank's board said that annual inflation in July, which accelerated to 1.62% from 1.43% in the previous month, was still within the target range. It projects annual inflation to remain within the range in August then gradually move to 2.0% by the end of 2018.

Policymakers decided "to maintain an expansionary monetary policy stance until [the board] is certain that this convergence will take place when inflation expectations are anchored in a context in which the level of economic activity is close to its potential level of growth."

Peru's GDP remains below its potential growth level but "signs of increased dynamism" could be seen in recent economic data, according to the bank. "Most indicators of business expectations improved in July and continue to be on the optimistic side. Moreover, a recovery is observed in several indicators of economic activity, consumption, and investment," it said.