September 14, 2017 / 11:48 PM / in a year

UPDATE 1-Peru cenbank cuts key interest rate for third time this year

(Adds comments from central bank statement, context)

LIMA, Sept 14 (Reuters) - Peru’s central bank lowered the benchmark interest rate to 3.5 percent from 3.75 percent on Thursday, citing sluggish economic growth and a spike in inflation that it described as transitory.

Seven out of 15 analysts polled by Reuters had forecast the 25-basis point cut while the remaining eight had expected the bank to hold the rate steady after lowering it in May and July.

The third rate reduction this year comes as the sol currency has gained more than 3.5 percent against the dollar since January despite the central bank’s frequent interventions in the local spot market.

The bank said it would pay special attention to new information related to inflation to consider additional changes to monetary policy.

The head of Peru’s central bank told Reuters last month that there was room for one or two additional rate cuts this year to help push the economy out of a slowdown.

In a statement following its board meeting, the central bank said the economy was expanding below its potential rate and that a spike in consumer prices in August would be transitory.

“Measures of the inflationary trend are within the target range and are projected to continue to decline in coming months,” the central bank said.

Reporting by Lima Newsroom; Editing by Cynthia Osterman

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