Peru holds rate steady, sees inflation converging to 2%

    Peru's central bank maintained its policy rate at 4.25 percent as inflation recovers from supply-side shocks and economic growth remains close to potential.
    The Central Reserve Bank of Peru (BCRP), which has held rates steady since April 2011, said it expects inflation to converge towards 2.0 percent in coming months due to improvements in the supply of foods and productive activity that is close to potential in a generally weak economic environment.
    Peru's headline inflation rate fell to 2.45 percent in February from January's 2.87 percent, primarily reflecting a decline in food prices, the central bank said.
    The underlying annual inflation rate was 3.22 percent in February and inflation excluding food and energy was 2.20 percent, the bank added.
    Peru's Gross Domestic Product expanded by only 0.6 percent in the fourth quarter from the third quarter for an annual rate of 5.9 percent, down from the third quarter's pace of 6.8 percent.
    The BCRP targets annual inflation of 1.0-3.0 percent.
 
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