Peru’s central bank keeps interest rates at 4.75% amid trade war uncertainties. Inflation remains low, but policymakers worry about the impact of U.S. tariffs on exports. The country plans diplomatic measures to protect its copper and agricultural sectors while forecasting economic growth of 3% this year.
Peru’s central bank maintained its benchmark interest rate at 4.75% on Thursday, aligning with seven of the eleven economists surveyed by Bloomberg. While four forecasted a reduction to 4.5%, the bank cited rising global economic risks linked to trade war uncertainties, leading to financial market volatility. Despite Peru experiencing one of the lowest inflation rates among emerging markets and strong economic growth, policymakers are wary of potential adverse effects from U.S. trade policies, especially on exports of metals and fruits.
In February, Peru’s annual inflation rate decreased to 1.5%, with expectations for further decline to around 1% this month. The central bank projects a 3% economic growth for the year, indicating robust economic health. Energy and Mines Minister Jorge Montero mentioned efforts to send a delegation to negotiate against tariffs on copper exports, while Agriculture Minister Angel Manero expressed optimism that U.S. tariffs would likely not target Peruvian crops, though they are prepared to engage the World Trade Organization if necessary.
In conclusion, Peru’s decision to hold interest rates steady reflects a careful assessment of both domestic inflation and global trade-related risks. Policymakers remain vigilant regarding the potential impact of U.S. tariffs on the country’s key exports. With current inflation at a manageable level and positive growth forecasts, Peru is poised to navigate the challenges posed by international trade tensions.
Original Source: www.livemint.com
