Julio Velarde: Peru can reduce inflation without triggering a recession

Until last month inflation Peru’s annual rate has reached 8.5%, but the Central Reserve Bank (BCR) predicts the rate will be cut to at least 3% next year.

Recently President of BCR, Julio Velardeindicated that the organization is confident that the measures applied will achieve their goal without having a strong impact on GDP.

“I think we will succeed in bringing inflation down without causing a recession,” he said during the XL meeting of BCR economists.

Velarde added that so far no one is talking about recession in Peru as a central forecast and argued that at the moment there are several organizations that are considering this scenario at the global level.

“Most think it will be a small, technical (recession),” he said.

The President of the Monetary Organization pointed out that the risk that central banks see around the world is that the balance sheet is low. inflation higher consumer price expectations remain.

But he warned that if inflation expectations remain higher than before, “unfortunately, the path for the global economy will become more difficult.”

“The same problem is being discussed in the US, not that inflation down, but when it goes down, it stays at a higher level than we are used to,” he said.

Velarde reiterated that everything points to a fall in inflation, but if the balance of inflation is reached and expectations remain at 4%, it will be a problem.

The economist added that the reaction BCR The increase in the base rate occurs because it is undesirable for imported inflation due to rising food or fuel prices to contaminate other prices and create higher inflation expectations.