It's the seventh consecutive rate hike from Peru

Peru increased interest rates for the seventh time in a row to reduce the effects of the global inflation shock on the country's economy. The Central Bank of Peru increased the policy rate by 50 basis points to 3.5 percent. In the statement made by the bank, it was stated that "While the Board is cautious about inflation, new information on inflation expectations and monitoring the course of economic activity, it may change its monetary policy stance if it deems necessary." Two years after Covid-19 triggered the global recession, many developing countries such as Brazil, Russia and South Africa started to cut their emergency aid after their economies recovered. A few hours before Peru's decision, Mexico also raised interest rates by 50 basis points to 6 percent.

Inflation target doubled

Annual inflation in Peru slowed to 5.7 percent last month, reaching its highest level in 13 years in December. This figure is more than double the bank's 2 percent target. The South American country has been experiencing political turmoil in recent weeks. The bank did not mention the political problems in the country, but emphasized that it is trying to prevent volatility in financial markets due to uncertainties. Investors were delighted that Oscar Graham, a former Federal Reserve Economist, was appointed finance minister amid all the chaos.