Inflation targeting and Quantitative Tightening: Effects of Reserve Requirements in Peru

By ; ;

February 2014

Language: English

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Inflation targeting and Quantitative Tightening: Effects of Reserve Requirements in Peru

Keywords

  • inflation targeting
  • non-conventional monetary policy
  • reserve requirements

JEL Classification

  • E51
  • E52
  • E58
  • G21

Abstract

This paper provides an overview of the Reserve Requirements measures undertaken by the Central Bank of Peru. We provide a rationale for the use of these instruments as well as empirical evidence on their effectiveness. In general, the results show that a reserve requirement tightening has the desired effects on interest rates and credit levels both at banks and smaller financial institutions (cajas municipales).