Peru's cenbank seen holding key rate steady on cooling inflation
LIMA Nov 10 (Reuters) - Peru's central bank is expected to hold the benchmark interest rate steady at 3.50 percent on Thursday after inflation cooled in recent months, a Reuters poll showed Tuesday.
All 10 economists surveyed said they expect the central bank to leave the key rate unchanged at its board meeting this week, after the annual inflation rate eased to 3.66 percent in October from a three-year high of 4 percent in August.
The bank's inflation target range is 1-3 percent.
But several analysts said the central bank would likely raise the key rate in coming months to offset expected impacts on inflation from the falling exchange rate and the weather pattern El Nino.
Last week, the central bank signalled it would not hike just yet, saying it was "happy" with inflation in recent months and expected the sol currency's depreciation to ease next year.
The sol fell 1.25 percent against the dollar in the past two weeks on growing expectations that the Federal Reserve will raise interest rates in December. The central bank sold $277 million in the local spot market to counter the sol's losses.
The central bank surprised the market with a rate hike in September after the sol's rapid depreciation squeezed prices and unanchored inflation expectations.
Inflation expectations fell slightly this month. Analysts polled by the central bank now see 2016 inflation at 3.2 percent instead of 3.3 percent, though the forecast for 2015 remained at 3.8 percent. (Reporting By Ursula Scollo, Writing by Mitra Taj; Editing by Bernard Orr)
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