Peru Surprises with Rate Hike

Contrary to market expectations, Peru’s central bank tightened its rate by 25bp to 3.25%. The bank says the hike is a preventive measure to avoid inflationary pressures from being influenced by high domestic demand. Barclays, one of the shops expecting rates to remain unchanged, had forecast that Peru would not raise rates until March. Morgan Stanley had thought the central bank was likely to take comfort in the near term from benign inflation data and slowing economic growth to keep rates on hold.