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UPDATE 1-Peru central bank holds key interest rate steady at 3.25 pct
May 14, 2015 / 11:37 PM / 3 years ago

UPDATE 1-Peru central bank holds key interest rate steady at 3.25 pct

(Adds background on past rate changes)

LIMA, May 14 (Reuters) - Peru’s central bank held the benchmark interest rate steady at 3.25 percent for the fourth month in a row on Thursday, despite weak economic growth.

All 11 analysts polled by Reuters had said the central bank would leave the key rate unchanged again to avoid stoking a steeper slide in the sol currency.

The bank last lowered the benchmark interest rate in January to counter a year-long slowdown of Peru’s mining-fueled economy.

But the sol’s losses against the dollar have kept the bank from cutting the rate again. An interest rate cut would further curb demand for soles by reducing yields.

The central bank has said it prefers to stimulate economic activity by lowering reserve requirements for deposits in soles as it has over the past year - thus strengthening its bid to reduce debt in dollars.

The monetary authority introduced a new policy this week to boost credit in soles by auctioning loans in the local currency to private banks using deposits from public institutions.

The annual inflation rate remained at 3.02 percent in April, at the upper limit of the central bank’s 1 percent to 3 percent tolerance range.

The government has said the economy likely grew by about 1.5 percent in the first quarter from the same period a year ago, far from the 5 percent figure that the central bank views as the potential growth rate.

Official economic growth data for March is scheduled for release on Friday.

Reporting By Lima Newsroom; Editing by Ken Wills and Diane Craft

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