(Bloomberg) -- Peru left interest rates unchanged on Thursday as policymakers try to gauge the inflationary impact of global trade wars.
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The central bank held its key rate at 4.75% on Thursday, as expected by seven out of 11 economists surveyed by Bloomberg. The other four expected a quarter percentage point cut to 4.5%.
The central bank noted positive local inflation trends, but said that global economic risks have risen “due to the high uncertainty associated with the impact of restrictive measures to foreign trade.”
“In that context, high volatility in financial markets is being observed,” the bank said in its statement.
Peru has one of the lowest rates of inflation in emerging markets, along with economic growth that is out-pacing regional peers. But authorities have begun to acknowledge that US President Donald Trump’s trade policies could impact Peru, especially if metal and fruit exports are hit with levies.
In February, Peru’s annual inflation slowed to 1.5%, with the central bank restating on Thursday that it expects it to further cool to around 1% this month. The bank forecasts an economic expansion of 3% this year.
Energy and Mines Minister Jorge Montero said this week that Peru is readying a delegation to try to avert tariffs on its copper. Agriculture Minister Angel Manero said it was unlikely the US would target Peruvian crops such as blueberries or grapes, but said the country would appeal to the World Trade Organization if it came to that.
--With assistance from Robert Jameson.
(Adds quote from central bank statement)
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