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Peru’s Central Bank does not rule out new interest rate cut in September

Peru's Central Bank does not rule out a new monetary stimulus in September after cutting its benchmark interest rate by 25 basis points to 2.50%, the agency's central economic studies manager, Adrián Armas, said on Friday.

View of the historic center of Lima

View of the historic center of Lima / Reference image / Pixabay

Reuters | Marco Aquino

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Leer en español: Banco Central de Perú no descarta nuevo recorte de tasa de interés en septiembre

The entity reduced on Thursday - as the market expected - its interest rate after keeping it stable for 16 months, at a time when the economy of the mining country shows signs of slowing down and inflation is within the target range.

The decision "does not necessarily imply that new reductions come, but that will depend on the information that comes from here to the next four weeks where the board meets again and will announce the new information," Armas said in a conference call on monetary policy

Armas said that the recovery of Peru's economy is observed in June - in the two months prior to low levels of expansion - although the indicators show that the rebound would take place at a "slower pace than expected."

The official also said that the bank is evaluating the possible impacts on the economy after the official proposal to advance the general elections one year before 2020, which Congress must define in the coming months.

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The rating agency Moody's said Thursday that the proposal to advance the elections represents a downward risk in Peru for its economic growth.

"We are monitoring the impacts, we see concrete data, we are seeing that there has been a reduction in business confidence indices and we are monitoring how that is affecting the economy," said Armas.

The Peruvian central bank in early July cut its estimate of economic growth for this year to 3.4% from its previous projection of 4%, amid a lower performance of the key mining sector and private investment.

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