UPDATE 2-Peru central bank holds key rate steady for fifth straight month

jueves 11 de junio de 2015 19:37 GYT
 

(Adds central bank quote on inflation, context)

LIMA, June 11 (Reuters) - Peru's central bank held the benchmark interest rate steady at 3.25 percent for the fifth month in a row on Thursday as inflation has quickened and the economy shows signs of recovery.

All 15 analysts polled by Reuters had said the central bank would leave the key rate unchanged again in June after inflation surged in May and the sol currency continued to trade near a six-year low.

The bank last lowered the benchmark interest rate in January to counter a year-long slowdown of Peru's mining-fueled economy, which has continued to expand at a weak pace.

The sol's losses against the dollar have kept the bank from lowering the rate again, analysts say. A rate cut would further curb demand for soles.

In May, inflation surged to 0.56 percent, leaving the annual rate at 3.37 percent - above the central bank's 1 to 3 percent tolerance range for the third month in a row. The central bank has said it will likely be above 3 percent again in June.

"National inflation has been affected by temporary supply factors that have been reversing more gradually than expected," the central bank said in a statement.

The central bank has said an economic recovery is underway and that year-on-year growth likely picked up to between 4.2 and 4.7 percent in April.

The central bank sees the economy's potential growth rate, the pace at which it can expand without stoking inflation, at about 5 percent.

The central bank has forecast inflation at about 3 percent by the end of the year and gross domestic product to rise 3.9 percent.

(Reporting by Lima Newsroom; Editing by Diane Craft)