Two decades of inflation targeting and Latin America's steadiest record

Having anchored the currency and tamed hyperinflation in the 1990s, the Banco Central de Reserva del Peru formally adopted an explicit inflation-targeting regime in 2002, setting a target of 2% plus or minus one percentage point. Governor Julio Velarde, welcoming central bankers from across the region to the BCRP's own centenary conference in March 2022, noted that average inflation since the start of the century had run at just 2.7%, the lowest figure among Latin American countries that issue their own currency, a record achieved despite Peru's continued exposure to commodity-price swings, El Nino weather shocks, and periods of political instability. Velarde attributed the achievement partly to the Bank's willingness to intervene actively in the foreign exchange market and to use reserve requirements as a complementary tool, a response to Peru's persistent financial dollarization rather than a pure textbook inflation-targeting approach. The result, visible in Peru's indicator charts since the early 2000s, is a growth and inflation profile markedly steadier than in the hyperinflationary decades before 1990 or in several of its regional peers since.