May 11, 2018 / 12:06 AM / a year ago

UPDATE 1-Peru central bank holds key rate, cites inflation in guiding policy

(Adds quote from central bank)

LIMA, May 10 (Reuters) - Peru’s central bank left the benchmark interest rate unchanged at 2.75 percent as widely expected on Thursday, and said it would maintain an expansive monetary policy stance until inflation accelerates to its goal of 2 percent.

All 17 analysts polled by Reuters had forecast the rate hold as economic growth has slowly picked up from a sharp slowdown last year.

Inflation, however, has remained below the central bank’s 1-3 percent target range for two months straight, increasing slightly to 0.48 percent in April.

The bank said there were “clear signs” economic growth was becoming more dynamic and predicted inflation would quicken back into its target range in the second quarter.

Inflation would “gradually converge to 2.0 percent by the end of the year,” the central bank’s board said in a statement.

“The board considers it appropriate to maintain the expansive position of monetary policy until it is ensured such a convergence occurs in an environment of anchored inflation expectations,” it added.

The president of the central bank told Reuters late last month that there was no reason to be “pessimistic” about sluggish economic growth or worried about the risk of deflation as prices retreat due to supply factors. (Reporting by Mitra Taj and Teresa Cespedes; Editing by Leslie Adler)

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