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Peruvian central bank keeps key rate at 2.75%

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Peruvian central bank keeps key rate at 2.75%

Peru's central bank kept its monetary policy rate at 2.75%, with annual inflation expected to converge to its target this year.

"The board considers that it is appropriate to maintain an expansionary policy stance until it 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," the Banco Central de Reserva del Perú said in a statement.

Inflation accelerated to a year-over-year rate of 0.93% in May from 0.48% in April, below the central bank's target band. Annual inflation rate is projected to be within the target range in June and gradually converge toward 2% by the end of 2018.

Business optimism improved last month, while several indicators of economic activity, consumption, and investment signal a recovery. The central bank, however, noted that GDP remains below the potential growth rate.

The central bank also maintained its overnight deposit rate at 1.50%. Rates for direct repos and rediscount operations as well as swaps will remain at 3.30%.