Peru’s Central Bank Hopes for Government Change in Venezuela

(Bloomberg) -- “I hope there will be a change of government to a more democratic government” in Venezuela, Central Bank of Peru President Julio Velarde said in an interview in London.

About 650,000 people have migrated from Venezuela to Peru, Velarde said. Once among the most prosperous countries in Latin America, Venezuela has suffered an economic catastrophe under President Nicolas Maduro, marked by hyperinflation and widespread shortages of food and medicine.

More highlights from the interview:

• Hyperinflation is “associated with a government that tries to intervene too much in the economy.”
• Migration out of Venezuela is impacting wage growth in Peru’s informal sector.
• On monetary policy, Velarde said that Peru’s central bank is “completely data-dependent.” He said that if data is “stronger, a rate hike might come sooner. If inflation is pretty well controlled, inflation expectations are well controlled, it might be somewhat delayed.”
• The U.S.-China trade war is a risk to the growth outlook, though markets don’t seem concerned given that commodity prices have been rising in recent weeks.
• Expectations for Fed policy impacts Peru’s monetary policy through asset prices.
• Peru has low volatility in its currency because of the “perception of intervention” more than intervention itself.

Read More

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• Vital Food and Fuel Exit Venezuela as Smuggling Worsens Crisis

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