BCR raises the benchmark interest rate for the fourth time in a row and reaches 2%

The Central Reserve Bank (BCR) once again raised the reference interest rate for the fourth time in a row and now stands at 2%, in an attempt to alleviate temporary inflation that is still above the target range.

The BCR specified that the decision to raise the rate, after having remained at 1.5% in October, “It does not necessarily imply a cycle of successive increases.”

“The rate from inflation at twelve months, it increased from 5.23% in September to 5.83% in October, temporarily placing it above the target range due to factors such as the increase in international prices of food supplies and fuels, as well as the exchange rate.”, Specified the Central bank.

The monetary entity projected that the inflation will return to the target range in the second half of next year due to the reversal of the effect of transitory factors such as the exchange rate, international prices of fuels and grains and “That economic activity will still be below its potential level”.

“World economic activity, although at a slower pace, has been recovering and this process is expected to continue in the coming quarters as vaccination in the world and significant fiscal stimulus programs in developed countries continue to advance.”He added.

Despite the fact that most indicators of expectations about the economy improved in October, the institution noted that some are still in the pessimistic range.

“The directory is especially attentive to new information regarding the expectations of inflation and the evolution of economic activity to consider, if necessary, changes in the monetary policy position”, He said.

The BCR It was considered convenient to maintain the expansionary monetary policy position for a prolonged period through the gradual withdrawal of the monetary stimulus, based on the information available.

“The central bank It will continue to carry out all the actions necessary to sustain the payment system and the flow of credits in the economy. The financial markets have continued to show volatility in a context of uncertainty and the shares of the BCRP were aimed at attenuating these volatilities”, He specified.