Central Bank Monetary Policy: A Historical Perspective

This article examines the evolution of the monetary policy of the Central Reserve Bank of Peru since its creation in 1922, with an emphasis on its impact on the country’s macroeconomic stability. It raises the question of whether the Central Bank’s autonomy has been sufficient to mitigate inflation and stabilize economic growth over time. Throughout the analysis, several episodes of inflation are identified, including hyperinflation of 7,649.7% in 1990, attributed to expansionary monetary and fiscal policies. The study is based on a historical account spanning from the Bank’s founding to the structural reforms of the 1990s, using a qualitative and quantitative framework that incorporates macroeconomic data. The results suggest that the Central Bank’s lack of independence, coupled with inadequate coordination with fiscal policy, contributed to the ineffectiveness of inflation control. The implications suggest that strengthening the Central Bank’s autonomy and ensuring proper coordination between fiscal and monetary policies are essential to guaranteeing economic stability in Peru. (Abstract and audio: Department of Economic Publications)