Peru’s central bank raises benchmark interest rate to 5.5%

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A worker walks pasts the logo of the Central Reserve Bank of Peru (BCRP) inside its headquarters building in Lima

LIMA – Peru’s central bank raised the country’s benchmark interest rate by 50 basis points to 5.5% on Thursday, the eleventh consecutive hike, as authorities in the copper-producing Andean nation battle stubbornly high inflation.

Prices rose more slowly in May than in the two prior months, but annual inflation still reached 8.09%, its highest level in 24 years.

In its current monetary policy tightening cycle, Peru’s central bank has raised the key interest rate 525 basis points since mid-2021. Thursday’s decision follows rate hikes this week in Brazil, Chile and Mexico, as authorities respond to inflation that is not falling as quickly as expected.

In a statement, the bank repeated guidance from last month that it expects annual inflation to begin to fall in July.

“Most leading indicators and expectations about the economy remain pessimistic, but they have recovered in May,” the bank said.

(Reporting by Carolina Pulice and Marco Aquino; Editing by Christopher Cushing and Editing by Muralikumar Anantharaman)