FX.co ★ Peru Leaves Rates on Hold

The Central Bank of Peru decided to maintain its benchmark interest rate at 4.5% during its June meeting, adopting a cautious stance guided by economic data for potential future changes. This decision was influenced by recent inflation figures, which indicated a marginal monthly decrease of 0.06% in May, primarily due to reduced food prices, while core inflation inched up by just 0.05%. The annual headline inflation rate stayed at 1.7%, and core inflation slightly declined to 1.8%, both aligning closely with the central bank's target range. Inflation expectations for the next 12 months remained stable at 2.3%, comfortably within the target band. Although indicators of economic activity showed a slight weakening in May, most signals pointed towards an optimistic outlook, with output near its potential level. The central bank also highlighted growing global trade tensions and financial market volatility as significant risks to the international economic landscape, which could potentially affect inflation stabilization efforts.