Archive · 8 Oct 2026
Peru Holds Key Rate as Policymakers See Inflation Jump as Temporary
Peru’s central bank decided not to change the cost of borrowing.
It kept its main interest rate at 4.25%, as it has for 13 months.
Many economists thought the bank would raise the rate.
Prices rose 4.55% over the year to September, partly because food and energy became more expensive.
That is higher than the bank’s preferred range.
Officials think some of the price increases may not last.
They are watching the economy and weather conditions, including El Niño, before deciding whether to change rates.
Governor Julio Velarde expects inflation to come down to the target range in 2027.
Peru’s central bank kept its benchmark interest rate at 4.25% for a 13th consecutive month.
Nine of 13 economists surveyed by Bloomberg had expected a quarter-point increase.
Annual inflation reached 4.55% in September, its fastest pace since 2023 and above the target range’s 3% upper limit for seven months.
The central bank said it would monitor inflation, expectations, economic activity and supply shocks, and take necessary action to meet its target.
Governor Julio Velarde expects inflation to end the year at 4.2% and return to target in 2027, while weather-related risks could influence future rate decisions.
- Who
- Peru’s central bank, led by Governor Julio Velarde.
- What
- It held its benchmark interest rate at 4.25%, despite inflation above its target range.
- When
- Wednesday; inflation figures cited were for September.
- Where
- Peru.
- Why
- Policymakers expect the recent acceleration in inflation to be temporary, while monitoring inflation and its causes.
Hold the rate
Raise the rate
How to respond to above-target inflation
Hold the rate
The central bank held rates, with policymakers expecting the recent inflation acceleration to prove temporary and saying they would assess incoming data.
Raise the rate
Nine of the 13 economists surveyed by Bloomberg expected a quarter-point hike; Governor Julio Velarde had also said a rate increase in coming months could not be ruled out.
- Benchmark interest rate
- 4.25%
- Length of rate hold
- 13 consecutive months
- September annual inflation
- 4.55%, the fastest pace since 2023
- Inflation target
- 1% to 3%; policymakers prefer inflation near the midpoint
- Economist survey
- Nine of 13 surveyed by Bloomberg expected a quarter-point rate increase; four expected no change.
- Velarde’s year-end forecast
- Inflation of 4.2%
- Expected return to target
- 2027, as temporary pressures dissipate
- Weather-related risks
- El Niño-related heat, warmer sea temperatures, heavy rains and flooding could affect fishing, crops, infrastructure and transportation.