(Adds context on weather, quote from central bank economist)
LIMA Feb 10 Peru's central bank said Friday
that it expects inflation to ease into its 1 percent to 3
percent target range in the second half of 2017 instead of
mid-2017 as previously forecast as unusual weather squeezes food
However, supply-side pressures on prices should be
short-lived and the central bank still expects inflation to
reach its previous year-end forecast of 2.3 percent, the bank's
economist Adrian Armas told reporters on a conference call.
Droughts that had gripped Peru in late 2016 have given way
to rains and floods that have disrupted the delivery of food
products from rural regions to the capital Lima.
Peru last week said that a "weak" El Nino phenomena had
triggered recent downpours and that more wet weather was on the
Armas said the impacts of El Nino would likely affect crops
in April or May.
"The convergence of inflation to the target range is going
to take somewhat more time" than previously expected, Armas said
on a conference call with reporters. "These climate factors
weren't here two months ago."
Economic consultancy Capital Economics said it expects the
central bank to hike the benchmark interest rate - held at 4.25
percent for the past year - by 25 basis points twice in 2017 to
rein in an expected quickening of inflation.
Armas said the central bank still views its current monetary
policy stance as expansive.
(Reporting by Teresa Cespedes, Writing by Mitra Taj; Editing by