Peruvian Central Bank Holds Reference Rate at 4.25%

The Central Reserve Bank of Peru held its monetary policy reference rate steady at 4.25%.  The Bank said the "decision takes into account the slowdown observed in economic activity and the intensification of international financial risks. Should these trends continue, the Central Bank will change its monetary policy stance."  The Bank further noted: "Some current and advanced indicators of activity show a lower pace of growth than in the first semester. Furthermore, indicators of global activity show a lower growth and increased uncertainty continues to be observed in international financial markets."

Peru's central bank also held the interest rate at 4.25% at its August meeting, while the bank last 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 August, matching the 3.35% rate reported in July, and 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 6th of October 2011.  The Peruvian Nuevo Sol (PEN) last traded around 2.73 against the US dollar, with the PEN gaining approx. 3% year to date.

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