Peru’s central bank has maintained its key interest rate at 4.75% as it assesses the inflationary implications of global trade wars. Though inflation trends are favorable, concerns over financial market volatility and trade policies, particularly from the US, pose risks to the economy.
On March 13, 2025, Peru’s central bank decided to maintain the interest rate at 4.75%, as it assesses the impact of global trade conflicts on inflation. This decision aligned with the expectations of seven out of eleven economists survey participants, while four anticipated a cut in the rate to 4.5%. The bank acknowledged positive local inflation trends but raised concerns regarding increased global economic risks associated with foreign trade restrictions.
In its statement, the central bank highlighted observed volatility in financial markets, indicating the uncertainties surrounding trade relations. Despite facing potential challenges from US trade policies, particularly regarding metal and fruit exports, Peru continues to demonstrate one of the lowest inflation rates among emerging markets, coupled with robust economic growth.
The annual inflation rate in Peru slowed to 1.5% as of February, with the central bank predicting a further decline to approximately 1% within the month and a projected economic growth of 3% for the year. In response to potential tariffs, Energy and Mines Minister Jorge Montero announced efforts to protect copper exports, while Agriculture Minister Angel Manero expressed confidence that the US would not impose tariffs on Peruvian fruits like blueberries and grapes. He also mentioned preparedness to consult the World Trade Organization if necessary.
Peru’s decision to hold interest rates at 4.75% reflects a cautious approach to managing potential inflation resulting from global trade tensions. While local inflation remains low and economic growth positive, the government is proactively addressing possible tariff impacts on key exports. This strategic decision aims to safeguard Peru’s economic stability amid rising global uncertainties.
Original Source: financialpost.com
