LIMA, June 7 Fiscal stimulus from Peru's
government would do more to spur a much-needed boost in credit
demand than would a cut in interest rates, Julio Velarde, head
of the country's central bank said.
On the eve of a monetary policy meeting on Thursday, Velarde
said he is considering several variables as policymakers look to
reverse a deceleration of investment and economic growth.
"It's important to understand that the problem at this point
is not the rate. It's that credit demand has to be reactivated,"
Velarde told reporters late Tuesday.
"To reactivate it we need fiscal stimulus. It's almost
indispensable," he added.
The central bank cut its benchmark interest rate to 4
percent on May 11, down from 4.25 percent previously, in the
first rate cut since January 2015.
Peru's economy grew by 2.1 percent in the first quarter
versus the same 2016 period, its lowest rate in two years due to
severe flooding in parts of the country and reduced construction
activity, the government reported last month.
(Reporting by Teresa Cespedes; writing by Hugh Bronstein;
editing by Diane Craft)