WASHINGTON: Peru’s central bank kept borrowing costs unchanged after inflation eased back to its target range sooner than expected amid sluggish domestic demand. The central bank board, led by bank President Julio Velarde, held the key rate at 4.25 percent Thursday for a sixth consecutive month, matching the forecast of all 15 economists surveyed by Bloomberg.
“The bank remains vigilant of projected inflation and its determinants in order to consider adjustments to the benchmark rate,” the board said in a statement accompanying its decision. Inflation will remain close to the top of the target band in the coming months before falling to 2 percent at the end of next year, it added.
Peru’s annual inflation rate fell to a 17-month low in July after the sol rebounded and the central bank raised borrowing costs four times in the past year to tame inflation expectations. Though domestic demand remains weak, a jump in business sentiment following presidential elections last month suggests private investment will recover in the coming months, said Roberto Flores, chief strategist at Inteligo SAB.
