Peru

Peru had a long period in which monetary instruments were direct and ineffective, followed by a sustained stabilisation and liberalisation from 1993 which eventually laid the basis for the adoption of inflation targeting from 2002.

Years Targets and attainment Classification
1974-92 exchange rates (dual or multiple in most years) adjusted frequently and in varying ways with eye to balance of payments and/or inflation; monetary policy instruments mainly direct; fiscal dominance endemic; new currencies 1985, 1991; special status of state-owned Banco de la Nacion relative to central bank complicates monetary control; several failed attempts at stabilisation and at financial liberalisation; varying rates of dollarisation unstructured discretion UD
1993-2001 sustained stabilisation and liberalisation from early 1990s: central bank gets some autonomy, role of Banco de la Nacion reduced, exchange rate floating (since late 1990), fiscal deficits controlled; liberalisation and deepening of financial markets; focus of policy on inflation reduction via control of base money; among monetary instruments emphasis shifts from reserve requirements to interest rates; significant continuing dollarisation loosely structured discretion LSD
2002-14 inflation targets; overshoots 2008 and 2011 and smaller deviations 2012 and 2014, but inflation expectations remain anchored except for brief period around 2008; occasional forex intervention full inflation targeting FIT

Selected IMF references: SR 1974 pp13-14; RED 1979 pp35-7; RED 1982 pp27-31, 37-9; RED 1984 pp30-31, 56; SR 1987 pp2-3; RED 1990 pp1-2, 33-9, 58; RED 1995 chI; SR 1997 AppV; SI 2001 chIV; SR 2002 p10; SR 2009 p11; SR 2012 p7; SR 2015 p5.

Additional source: Pastor (2012).

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