Peru Central Bank: Early Info Shows Protests Affecting Growth, Inflation

• Peru's economy and inflation have likely been hit by the ongoing social upheaval that has rocked the Andean nation since December, early indications suggest, the head of the central bank's economic studies unit, Adrian Armas, said on Friday, February 10.
• Protests over the removal and arrest of former President Pedro Castillo in December have snarled Peru, with clashes between demonstrators and security forces leaving dozens dead. It is the worst violence in Peru in two decades and threatens to destabilize one of the region's most reliable economies.
• The protests' final impact would depend on how long they continued, he said; but warned that if they persisted, it would be "very difficult" for companies to recoup their losses this year.
• Armas' comments come a day after the central bank maintained its benchmark interest rate at 7.75%, making it the first time since the second half of 2021 that the bank did not hike its rate. Inflation surged well ahead of the bank's target range (1%-3%) to 8.66% in January, near the quarter-century high it reached last year.
• The institution said its decision to maintain the interest rate does not necessarily imply “the end of the cycle of increases” but rather that future adjustments in the reference rate will depend on new inflation data and its determinants, including the macroeconomic effects of recent social events.
• Nevertheless, the bank forecasts that inflation will reach 4.62% in early 2024, above the previous forecast of 4.3%.

(Source: Reuters)