Julio Velarde emphasizes the independence of the BCRP as key to economic stability.

At the recent Annual Convention of the Argentine Institute of Finance Executives (IAEF), the president of the Central Reserve Bank of Peru, Julio Velarde, emphasized the importance of the independence and solvency of the BCRP, achievements attained over the last 30 years. These characteristics have been crucial for implementing effective counter-cyclical policies during the challenging years of 2020 and 2021, amid the global health crisis caused by the COVID-19 pandemic.

During his speech, Velarde highlighted that the BCRP's ability to reduce the interest rate to a historic low of 0.25% allowed the Peruvian government to effectively access financial markets. This access facilitated borrowing at relatively low rates, a fundamental aspect for economic recovery. The credibility gained from an independent monetary policy was key to achieving the controlled inflation levels observed in the country in recent years.

The president of the BCRP also emphasized the Peruvian government's fiscal commitment as an essential factor in the economic stabilization process. Velarde recalled that the government committed to not requesting further financing from the Central Bank, a commitment that has been fully upheld. This decision has reinforced the autonomy of the BCRP and contributed to strengthening confidence in the Peruvian economy.

The experience Peru lived through during the hyperinflation period in the 1990s served as a reminder of the importance of adopting prudent fiscal and monetary policies. Velarde mentioned that the suffering and difficulties faced during that period have led to a consensus in Peruvian society about the need to maintain an independent Central Bank. This consensus, he said, is a pillar that will remain in the future.

In his speech, Velarde also addressed the current global and regional economic situation, highlighting the challenges many countries are facing today. Alongside the president of the Central Bank of Argentina, Santiago Bausili, both economists commented on the current state of the global economy, noting that there are indications in the United States that interest rates could decrease in the short term. This potential reduction, according to both, could help lower inflation without triggering a recession, a balance that many countries are seeking to achieve.

Velarde's participation in the IAEF Annual Convention was not only an opportunity to share the Peruvian experience but also to establish dialogue bridges regarding the economic policies of the region. Cooperation among the central banks of Latin America is becoming increasingly necessary in an interconnected and uncertain world.

Through his remarks, Velarde reaffirmed the importance of the autonomy of financial institutions in building robust and resilient economies. Peru's experience demonstrates that, despite challenges, an independent monetary policy can be key to facing crises and promoting stability.

Finally, Velarde's message resonated not only in the Peruvian context but also as a call to other countries to value and protect the independence of their central banks. At a time when many nations are grappling with the impact of inflation and economic instability, his words offer a valuable lesson on the importance of fiscal responsibility and credibility in monetary policies.

In summary, Julio Velarde's intervention at the IAEF Annual Convention stands as a testament to Peru's journey toward economic stability, a model that could serve as a reference for other countries in the region in their pursuit of a more prosperous and sustainable future.