Central Reserve Bank of Peru Holds Interest Rate at 4.25%

The Central Reserve Bank of Peru maintained its benchmark interest rate at 4.25% on Thursday, marking the 11th consecutive month that borrowing costs have remained unchanged. Policymakers determined that the recent rise in consumer prices is temporary, even though inflation reached 4.07% in July and has exceeded the bank's 3% target range for five straight months.

Under the leadership of Julio Velarde Flores, the bank aims to return inflation to approximately 2%. While the bank identified the El Niño weather phenomenon and conflict in the Middle East as risks for persistent inflation, it noted a normalization of oil market supplies.

Separately, the government of President Keiko Fujimori projects 3.5% economic growth for the year. Economy Minister Elmer Cuba attributed this projection to strong investment and high metal prices, noting that business confidence reached a nearly nine-year high in July.