LatinNews Daily - 13 December 2021

In brief: Peru raises benchmark interest rate

* Peru's central bank (BCRP) has raised its benchmark interest rate by 50 basis points to 2.50%, its fifth rate hike in a row in response to persistent inflation. It first raised the benchmark interest rate to 0.5% from 0.25% in August – its first increase since the start of the coronavirus (Covid-19) pandemic after it slashed it from 1.25% in April 2020. In response to the latest increase, the BCRP said that the “present decision does not necessarily mean a cycle of successive hikes in the benchmark interest rate”, noting that Peru’s monetary policy continues to be expansive. The BCRP highlights that the annual inflation rate reached 5.66% in November, down from 5.83% in October which is significantly above its target range of 1%-3%. It cited among factors driving up inflation, a surge in international food and fuel prices. However, it added that it expects inflation to return to within the target band in the second half of 2022 as transitory pressures recede.

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