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Peru holds rate, revises up 2016 growth forecast to 3.8%

Thursday, October 13, 2016 16:32
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    Peru’s central bank left its monetary policy rate at 4.25 percent, saying business expectations had continued to improve for the fourth consecutive months and it now expects the country’s economy to expand by 3.8 percent this year, up from last month’s forecast of 3.7 percent, while it continues to expect growth of 4.2 percent in 2017.
    The Central Reserve Bank of Peru (BRCP), which paused in its tightening cycle in March after four rate hikes, added that inflation expectations continue to reverse and inflation is expected to remain within the upper level of its inflation target range in coming months before it reaches 2.0 percent by the end of next year.
    Peru’s inflation rate rose to 3.13 percent in September from 2.94 percent in August. Excluding food and energy, the annual inflation rate rose to 3.01 percent from 2.96 percent. 
    The BRCP targets inflation of 1 percent to 3 percent around a 2.0 percent midpoint.
    While the central bank revised upwards its 2016 growth forecast, the central bank added the construction and manufacturing sectors suffered setbacks in the last three months due to weak investment.
    Peru’s Gross Domestic Product grew by an annual 3.7 percent in the second quarter of this year, down from 4.4 percent in the first quarter.
    The exchange rate of Peru’s sol, which declined against the U.S. dollar from August 2014 until late February this year, was trading at 3.40 to the dollar today, largely unchanged from 3.41 at the start of the year.


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