LIMA -- Peru's central bank left the monetary policy rate unchanged at 3.25% in this week's monetary policy meeting, in line with consensus expectations.
The central bank reiterated its message that the current level of the policy rate is consistent with the
convergence of inflation to the 2.0% target in the 2015-2016 forecast horizon, that temporary factors affecting headline inflation have taken longer than expected to dissipate, and that economic activity is growing below potential.
On the other hand, the bank changed its language regarding inflation expectations, noting that they have increased but remained within the 1% - 3% target range.
In previous press releases, it had stated that inflation expectations remained anchored.
Analysts expect the central bank to leave the policy rate unchanged for the remainder of the year given high inflation, a weakening currency, and hints of a recovery in economic activity.
Analysts warn, however, that a continued deterioration of inflation expectations or of different core inflation indices may lead the central bank to adopt a more hawkish tone or change its policy stance earlier than anticipated.