Peru: Surprise Rate Hike

January 7th, 2011
in News, Banking

Reuters:   In a surprise move, Peru's central bank raised its benchmark interest rate to 3.25 percent from 3 percent on Thursday in a bid to avert inflation in one of the world's fastest-growing economies.

Follow up:

Global increases in prices for food, especially grains, have started to worry economists who watched much of Latin America get hit with external prices shocks in 2008. Brazil appears poised to raise its benchmark rate again later this month.

The move in Peru came after three straight months of holding the rate steady. Eight of 10 economists surveyed by Reuters had forecast rates would be left unchanged, though two said an increase was likely.

"The increase in the rate is of a preventive nature in light of dynamic domestic demand, and high global prices for food and energy," the central bank said in a statement.  Read more at Reuters......

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