The Central Reserve Bank of Peru decided to maintain its benchmark interest rate at 5%, signaling caution despite rising inflation. The decision follows a recent acceleration in consumer prices, which increased by 0.36% in November, reflecting a year-on-year inflation rate of 5.7%. This marked an uptick after months of declining price pressures, driven by food and energy costs.
Analysts had widely expected the central bank to hold its rate steady, focusing on balancing economic stability with controlling inflation. Policymakers emphasized the need for a gradual approach, suggesting that inflation could ease toward their 2% target range by mid-2025. However, risks from external factors, such as volatile global commodity prices, remain prominent.
The Peruvian economy faces additional challenges, including slower growth and rising unemployment. GDP expanded by just 0.8% in Q3, reflecting weaker domestic demand and lower exports. The central bank remains under pressure to support economic recovery without fueling further inflationary trends, complicating monetary policy decisions.
This rate decision underscores a cautious stance amid complex economic dynamics. While inflation remains a priority, the central bank must navigate external headwinds and fragile growth. The focus now shifts to future policy moves as Peru’s economic outlook evolves in the coming months.
