Peru holds rate steady, inflation still within target

    Peru's central bank held its policy rate steady at 4.25 percent, as expected, reflecting "the fact that inflation remains within  the target range in a context of economic growth close to potential."
    The Central Bank of Peru (BCRP), which has maintained rates since April 2011, said inflation was projected to converge to the midpoint of the bank's target over the next months due to better food supply, production that is close to potential and inflationary expectations that are anchored to the target range, repeating its statement from last month.
    Peru's inflation rate rose slightly to 2.47 percent in May from 2.31 percent the previous month. The BCRP targets inflation of 1.0 to 3.0 percent.
    Peru's export sector is still weak, with volume and prices affected by the external market, the bank said. Lower global commodity prices are affecting countries like Peru.
    In the first quarter of this year, Peru's Gross Domestic Product rose by 2.1 percent from the fourth for annual growth of 4.8 percent, down from 5.9 percent in the fourth quarter.
    Last month the central bank's president, Julio Velarde, said he expected growth of 6.1 percent this year, down from an earlier forecast of 6.3 percent. In 2012 Peru's economy grew by 6.3 percent.

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