LIMA, April 10 (Reuters) - Peru will adopt a “more neutral” monetary policy stance due to higher-than-forecast inflation and a weakening local currency, a central bank official said on Friday.
The central bank left its benchmark interest rate unchanged at 3.25 percent for the third month in a row on Thursday as it weighed weak economic growth with fears of stoking inflation.
In a break from previous statements published after the last rate cut in January, the bank made no reference to possible “additional easing measures”.
“This time the statement takes a more neutral tone,” Adrian Armas, head of the bank’s economic research department, told reporters on a conference call.
Consumer prices in Peru rose 0.76 percent in March, pushing the annual rate to 3.02 percent. That is marginally above the upper limit of the bank’s 1 to 3 percent target range, after torrential rains and landslides squeezed food supplies.
Inflationary expectations have been compounded by a 4.7 percent depreciation of the Peruvian Sol against the dollar so far this year as investors bet on the U.S. Federal Reserve hiking interest rates soon, Armas said.
He said the weaker currency had a pass-through effect on inflation, worth 0.1 to 0.2 percentage point.
Peru, the world’s third-largest copper producer, forecasts economic growth will rebound to 4.2 percent this year after slowing sharply to 2.4 percent in 2014 due to a fall in investment and a drop in mining production. (Reporting by Teresa Cespedes; Writing by Richard Lough; Editing by Dan Grebler)