Peru hikes interest rate to 13-year high as inflation sparks protests

1 min read
Protest against the government of Peru's President Pedro Castillo, in Lima

LIMA (Reuters) – Peru’s central bank raised the country’s benchmark interest rate 50 basis points to 4.5% on Thursday, the highest since 2009, as authorities battle stubborn inflation that has sparked angry protests and rattled center-left President Pedro Castillo.

The Andean country’s interest rate has climbed steadily since the middle of last year when it was at a floor of 0.25% as the world’s no. 2 copper producer has rebounded from the impact of the coronavirus pandemic and inflation has started to bite.

Peru’s 12-month inflation rate stood at 6.82% in March, the highest in a quarter of a century, pushed up by higher food and fuel prices as well as a weakening sol currency versus the U.S. dollar. The central bank’s inflation target is from 1% to 3%.

The government earlier on Thursday ordered its armed forces to supervise the country’s highways for the next month, amid crippling protests nationwide over rising food and fuel prices.

The South American country has been beset by road blockades for over a week as anger has flared over rising costs, which have spiked since the Russian invasion of Ukraine.

(Graphic: Peru interest rate – https://graphics.reuters.com/PERU-ECONOMY/klvykjoabvg/chart.png)

(Reporting by Carolina Pulice and Marcelo Rochabrun; Editing by Sam Holmes and Richard Pullin)

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