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Central Bank · Economic Stability · Monetary Policy · Peru Economy
Julio Velarde, Governor of the Central Reserve Bank of Peru (BCRP), confirms Peru's economy is expected to grow in the coming months, supported by vaccine rollout, easing restrictions, improved terms of trade, and global recovery, despite transitory inflation and political volatility.
Velarde states economic activity will remain below potential until at least 2022. Inflation is currently above the target band due to global developments, including exchange rate and international fuel and grain prices, but domestic trend indicators are within target and will return to the band.
The government possesses the capacity to implement countercyclical policies, and the financial system remains sound. Political risks generated considerable volatility in local financial markets; however, the BCRP's significant fiscal and monetary initiatives contained spillovers to real estate and macroeconomic fundamentals.
The BCRP preserves monetary and financial stability, anchoring inflation expectations and ensuring adequate credit flows. Emerging economies face a slower short-term recovery due to limited vaccine supply and sharper frictions in the supply chain but will resume pre-crisis growth in the medium term.
The pandemic's long-term impact on potential output is uncertain, but authorities implemented aggressive monetary and fiscal policies to prevent undesirable long-run effects. Latin America's overall growth outlook is positive, driven by global demand recovery and high commodity prices.
