Peruvian rates on hold as currency concerns persist

Last night, the Central Reserve Bank of Peru (BCRP) held interest rates at 3.0% for the third consecutive month. Even though the outlook for inflation is deteriorating, currency concerns are likely to temper aggressive interest rate hikes. For now, we are sticking with our forecast for rates to reach 4.0% by end- 2011, but there is a risk that the peak will be lower.

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