Peru sube los intereses a 4% para combatir la inflacion
Peru Raises Benchmark Rate to 4% as Growth Surges, Inflation Accelerates
By John Quigley - Apr 8, 2011 3:25 PM ET
Peru’s policy makers raised their benchmark lending rate yesterday for the ninth time in 12 months after inflation accelerated to the fastest pace in almost three years amid booming economic growth.
The central bank’s seven-member board raised its benchmark rate by a quarter-point to 4 percent from 3.75 percent, matching 15 of 19 forecasts in a Bloomberg survey of economists. Four analysts forecast a half-point increase.
Central bank President Julio Velarde last week said that surging prices for grain and crude oil risk pushing annual inflation above the central bank’s 1 percent to 3 percent target range. Rising employment, wages and revenue from copper and gold exports fueled year-on-year economic growth of 9.5 percent in the first quarter after 2010’s 8.8 percent expansion, Finance Minister Ismael Benavides said yesterday.
“If the central bank sees inflation going beyond 3 percent, they won’t hesitate to tighten further,” said Augusto Saldarriaga, head of analysis at Banco Internacional del Peru. “Monetary policy is pretty neutral. They may have to keep tightening to keep inflation under control.”
The bank will continue to raise rates at a pace dictated by available data and will do so as inflation expectations rise, Adrian Armas, the bank’s research director, said today in a conference call with reporters from Lima.
Prices, Risk
Consumer prices rose 0.7 percent last month, the steepest rise since June 2008, led up by higher food costs. About half the increase was due to the higher cost of imports such as corn, according to the national statistics agency. The annual rate rose to a 20-month high of 2.66 percent.
Yields on Peruvian bonds have risen ahead of April 10’s first-round presidential vote amid investor concern that former renegade army Colonel Ollanta Humala may win.
The yield on the nation’s benchmark 7.84 percent sol- denominated bond due August 2020 has risen 35 basis points, or 0.35 percentage point, since March 20 to 6.65 percent, according to Deutsche Bank AG’s local unit.
The sol gained 0.1 percent to 2.7985 per dollar at 3:20 a.m. New York time, from 2.8024 yesterday. The currency has declined 1.1 percent since March 18, the worst performance against the dollar among 25 emerging-market currencies tracked by Bloomberg.
Projections
“This measure aims to limit the impact on inflation expectations from increases in international food and fuel prices, in a context of high growth in domestic demand,” the central bank said in a statement posted on its website. “Future adjustments in the benchmark rate will depend on new information about inflation and its determinants.”
BBVA Banco Continental, Peru’s second-largest bank, projects consumer prices will rise 3.4 percent in 2011. Scotiabank Peru, the country’s third-largest lender, expects rising food costs will push 12-month inflation to 3 percent in April and to 3.5 percent this year.
Policy makers’ statement explaining their decision dropped language describing the move as “preventative,” Citigroup Global Markets Inc. Latin America economists Joaquin A. Cottani and Camilo Gonzalez noted in a research note e-mailed to investors.
“We believe the BCRP will have to undertake a more aggressive policy stance, in order to prevent demand-driven inflationary pressures from rising,” the economists wrote.
‘Major Cut’
Though the central bank expects a correction in agricultural commodity prices in the second half of 2011, “the risk is these price pressures persist for longer than anticipated,” said Scotiabank economist Mario Guerrero, who predicted policy makers would raise the benchmark rate by 50 basis point to 4.25 percent yesterday.
The government is doing all it can to tame consumer prices, including a “major cut” in spending, to keep 2011 inflation at 3 percent to 3.5 percent, Benavides said last week.
The government has cut the sales tax this year, lowered import tariffs on some food products, frozen fuel prices, and proposed a fuel tax cut to mitigate the rise in international grain and crude oil prices. Peru is a net importer of oil, soybeans, corn and wheat.
A “lax” fiscal policy has “super-charged” the expansion of the $153 billion economy which is in danger of overheating, Morgan Stanley said in a March 21 report.
Gross domestic product rose 8.5 percent to 9 percent in February from a year ago, after 10 percent growth in January, Benavides told reporters in Lima yesterday.
Credit Demand
The central bank tightened reserve requirements for a third straight month on April 1 to rein in bank lending after credit grew 20 percent in February from a year earlier and 1.3 percent from January.
Demand for credit will slow, bringing the annual growth rate for 2011 to 16 percent, Velarde said March 31. Armas today said that credit had risen 21 percent from a year ago.
Peru, South America’s sixth-largest economy, will probably expand 7 percent this year as rising private investment offsets slower growth in public spending, the central bank said last month. It previously projected 2011 growth of 6.5 percent.
“The central bank is worried because the economy and inflation is so strong,” said Saldarriaga. “Overheating is their main concern. They need to put the brakes on.”
To contact the reporter on this story: John Quigley in Lima at
jquigley8@bloomberg.net To contact the editor responsible for this story: Joshua Goodman at
jgoodman19@bloomberg.net