Central Reserve Bank of Peru Holds Rate at 4.25%

The Central Reserve Bank of Peru maintained its monetary policy reference rate unchanged at 4.25%.  The Bank commented in its statement: "This decision takes into account the slowdown observed in global economic activity.  Future adjustments in the reference rate will depend on new information on the evolution of inflation and its determinants."  The Bank also said: "Some current and advanced indicators of activity show lower growth than in previous months.  Moreover, indicators of global activity show signs of weakness and increased uncertainty due to the downgrade of the U.S. debt and the persistence of risks associated with the fiscal situation of some industrialized countries."

The Bank held the interest rate at 4.25% at its June and July meetings, after it raised the monetary policy reference rate by 25 basis points to 4.25% in May this year.  Peru reported annual inflation of 3.35% in July, compared to 2.9% in June, 3.07% in May, 3.34% in April, and above the Bank's 1-3% inflation target.  The Bank's next Monetary Policy meeting will be held on the 8th of September 2011.  The Peruvian Nuevo Sol (PEN) last traded around 2.74 against the US dollar, with the PEN gaining approx. 2% year to date.

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