Peru's Central Bank Holds Rate at 4.25% as Annual Inflation Reaches 4.5%

Peru's central bank maintained its benchmark interest rate at 4.25% in its October decision. Annual inflation rose from 4.4% in August to 4.5% in September, while twelve-month inflation expectations remained at 3.1%, above the 1% to 3% target range. The bank attributed the deviation mainly to higher fuel prices and their impact on transportation costs in March and April. It expects inflation to approach 2% as supply shocks dissipate. The board said it would assess inflation, expectations, economic activity and the duration of supply shocks before making further policy adjustments.