Peru’s central bank holds interest rates at 4.75% to evaluate inflationary effects of global trade conflicts. While local inflation trends are positive, concerns about trade restrictions impacting exports arise. Annual inflation slowed to 1.5% in February, with further decline expected. Authorities engage in diplomatic efforts to protect exports from tariffs.
On March 13, 2025, Peru’s central bank maintained its key interest rate at 4.75%, as policymakers assess the impact of global trade wars on inflation. This decision aligned with the expectations of seven out of eleven economists surveyed by Bloomberg, while the remaining four predicted a quarter-point reduction to 4.5%. The bank acknowledged positive local inflation trends but expressed concern regarding increased global economic risks attributable to trade restrictions.
In their statement, the bank highlighted the heightened volatility in financial markets due to these uncertainties. Notably, Peru enjoys one of the lowest inflation rates in the emerging markets and experiences robust economic growth compared to its regional counterparts. However, authorities recognize that U.S. trade policies could adversely affect Peru, particularly concerning metal and fruit exports.
In February, Peru’s annual inflation rate dipped to 1.5%, with expectations from the central bank of further cooling to approximately 1% this month. The bank also projects a 3% economic growth for the year. Energy and Mines Minister Jorge Montero announced efforts to prevent tariffs on copper exports, while Agriculture Minister Angel Manero expressed confidence that U.S. tariffs on Peruvian crops are unlikely, voicing readiness to appeal to the World Trade Organization if necessary.
In conclusion, Peru’s decision to maintain its key interest rate reflects a cautious approach as officials evaluate trade war repercussions on inflation. The country’s low inflation rate and strong economic growth position it well in the region, yet potential impacts from U.S. trade policies remain a concern. With proactive measures from government officials, Peru strives to safeguard its exports and economic stability.
Original Source: financialpost.com
