Global Policy Spillovers and Peru's Monetary Policy: Inflation Targeting, Foreign Exchange Intervention and Reserve Requirements

24 Pages Posted: 7 Oct 2014

See all articles by Renzo Rossini

Renzo Rossini

Central Reserve Bank of Peru

Adrián Armas

Central Reserve Bank of Peru

Zenon Quispe

Central Reserve Bank of Peru

Date Written: August 2014

Abstract

This paper provides an overview of the monetary policy actions undertaken by the Central Reserve Bank of Peru, combining its main inflation targeting framework with sterilised FX interventions and reserve requirement measures in order to overcome the spillover effects of global policies to counter the recessionary implications of the global financial crisis. We provide a rationale for the use of these instruments, as well as empirical evidence on their effectiveness. In general, the results show that sterilised FX interventions and reserve requirement changes have the desired effects in limiting spillover effects and smoothing out the interest rate and credit dynamics in a dual monetary economy such as Peru.

Full publication: The Transmission of Unconventional Monetary Policy to the Emerging Markets

Keywords: Non-conventional policy, inflation targeting, foreign exchange intervention, reserve requirements

JEL Classification: E 51, E52, E58, F31

Suggested Citation

Rossini, Renzo and Armas, Adrian and Quispe, Zenon, Global Policy Spillovers and Peru's Monetary Policy: Inflation Targeting, Foreign Exchange Intervention and Reserve Requirements (August 2014). BIS Paper No. 78p, Available at SSRN: https://ssrn.com/abstract=2499832

Renzo Rossini (Contact Author)

Central Reserve Bank of Peru

Jirón Miroquesada 441
Lima, Lima 1
Peru

Adrian Armas

Central Reserve Bank of Peru

Jirón Miroquesada 441
Lima, Lima 1
Peru

Zenon Quispe

Central Reserve Bank of Peru ( email )

Jirón Miroquesada 441
Lima, Lima 1
Peru

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