Peru has the rate of inflation lower not only than the region, but even than the United States, the United Kingdom, Japan and the European Union. A level that is enviable for the rest of the countries of the world, which has led to recognize, in the international level, the work of Julio Velarde at the head of Central Reserve Bank (BCR) already said institution as such.
Yesterday, the president of the BCR recalled that the current low level of inflation in our country responds to a defined goal several years ago, with an equally demanding objective than that of countries with greater economic development.
“We did not have to accept that our inflation should be higher than that of the countries that are best handled. I mention it because some countries in the region have established higher goals than those of developed countries. We, for a long time, have an inflation goal of 2%, which is the same as that of the United States, Europe, Japan and the United Kingdom,” said Velarde.
Although in our country many authorities attribute the merit of the decline of this indicator, since 2002 the Central Bank adopted as a policy the establishment of a specific numerical objective for the inflation rate, which publicly communicates in the framework of its legal mandate to preserve price stability.
At the beginning of this policy, adopted in January 2002, the inflation target of the Central Bank was 2.5% per year. However, in line with the aim of having a more demanding fence as Velarde has pointed out, the monetary authority reduced it to 2% – in a range of 1% to 3% – in February 2007, long before the current government of Dina Boluarte or that Raúl Pérez Reyes assumed the Ministry of Economy.
Social impact
Velarde stressed that maintaining low inflation is not an isolated technical objective, but a policy with a deep social impact, since inflation “greatly impoverishes people.” He explained that the sustained price increase affects mainly people with lower income, since they lack assets to protect against the loss of purchasing power.
“Inflation is something that (sometimes) we forget, but it is terrible,” he said.
He also stressed that the inflation of Peru registered last year was less than that of the United States, and that this year is emerging in the same line. If this trend is maintained, the country’s financing cost, that is, the interest rate paid by the State to place 10 -year bonds will be even lower than that of the US economy.
This management of the BCR policy that has achieved price stability has been key to strengthening the sun. This is because low inflation transmits confidence in the local currency, which increases its demand, favors the supply of dollars and contributes to the appreciation of the exchange rate. At present, the sun is the strongest currency in the region and many other countries because it is the least depreciated. In what of the year, the sun appreciated 5.48% compared to the dollar.
Velarde’s dissertation was made during the launch of the Economic Essay contest that the Chamber of Commerce (CCL) of Lima will be carried out, which bears the name of the president of the monetary authority in tribute for his contribution to the country.
At the ceremony, the president of the CCL, Roberto de la Tore, highlighted the leadership of Julio Velarde, who, for 19 years in front of the BCRP, has demonstrated autonomy and wisdom and has consolidated the Peruvian currency as one of the strongest.
The CCL named Velarde to his auditorium as part of this recognition.
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