UPDATE 2-Peru central bank slashes benchmark rate to 2.0 pct

Fri Jul 10, 2009 1:20am BST

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* Peru cuts benchmark interest rate to all-time low

* Cenbank says indicators will guide future rate decisions (Adds analyst comment)

LIMA, July 9 (Reuters) - Peru's central bank slashed its benchmark interest rate to an all-time low of 2.0 percent on Thursday, from 3.0 percent, in its sixth straight cut this year to boost growth in the midst of a global downturn.

Thursday's cut was the bank's fourth consecutive 1-point reduction and came after consumer prices fell 0.34 percent last month.

Relatively low inflation this year has given the bank room to trim the rate, which is now at its lowest level on record.

"With this new cut, the interest rate has hit an all-time low, which represents a significant monetary stimulus. Future adjustments will depend on the evolution of major economic indicators," the bank said in a statement.

The bank's annual inflation target is 2 percent, plus or minus one percentage point.

Six of the nine economists polled by Reuters had said the bank would likely cut the rate to 2.0 percent, while three forecast it would fall to 2.5 percent.

"A cut of 100 basis points, which was expected, in some way suggests there may be more reductions ... because indicators of economic activity do not show a recovery and inflation is low," said Juan Carlos Odar, an analyst at Peru's largest bank, Banco de Credito (CRE.LM).

Peru's economy, which posted blistering 10 percent growth last year, is expected to ease to 3 percent growth in 2009 as prices for most metal exports have sunk and domestic demand has dropped. (Reporting by Marco Aquino; Writing by Dana Ford; Editing by Gary Hill)

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