LIMA, Mar 12 (Reuters) – Peru’s central bank kept its interest rate at 2.25% on Thursday after the March monetary policy meeting, distancing itself from a wave of cuts by other central banks amid fear of the effects of the coronavirus.
The agency said it made this decision, as most of the market expected according to a Reuters poll, while maintaining the annual inflation forecast at 2.0%, with a downward bias due to lower growth in domestic demand.
The monetary entity also added in a statement that in the first two months of the year public investment rose and economic activity indicators show a modest recovery. “However, business expectations deteriorated in February,” he added.
The central bank also said that the risks to global and local economic activity have been heightened by the impact of COVID-19 and volatility in international financial markets has risen significantly.
Peru’s economy grew 2.16% in 2019, its worst annual performance in a decade, affected by a slowdown in public investment, a significant drop in the fishing industry and lower mining production.
The current projection of local economic expansion for 2020, made by the government several months ago, is 4%, the same that will be reviewed in late March, according to authorities.
(Report by Marco Aquino, Edited by Javier López de Lérida)