(Bloomberg) Peru's top economic leaders are at odds over the country's weak economy.
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Central bank Governor Julio Velarde appeared to criticize Finance Minister Jose Arista at a mining event this week.
Velarde, who served as finance minister for 18 years, said past ministers were able to block Congress from increasing public spending, but now ministers can no longer criticize or try to block certain initiatives for fear of being removed from Congress, he said.
“Let's hope that the next president will have a majority in Congress,” Velarde said. President Dina Boluarte has been in power without representation in Congress since December 2022. She has been plagued by corruption scandals, mass protests and bad weather as she tries to navigate Peru's second deepest recession in 33 years and her approval rating has slumped to 7 percent.
Such conflicts are rare in Peru, where Mr. Velarde is respected as a key figure in economic stability and has served as finance minister since 2006, outlasting more than a dozen of his predecessors.
Finance Minister Arista slammed Velarde on Friday. “Maybe Minister Julio should listen to the Treasury's request to be more aggressive in lowering interest rates,” Arista told reporters.
The central bank has cut interest rates from a high of 7.75% last year to 5.75%, currently the lowest among regional banks, but Arista said that is not enough. “It will not help reopen the economy as quickly as we would like,” he added.
Velarde has been praised for quickly reining in inflation, which recently hit just 2.4 percent on an annualized basis.
But Velarde was criticized last year for clinging to optimism that Peru's economy could grow in 2023, despite a growing number of monthly economic data pointing to a continuing recession. He now predicts inflation will continue to slow this year.
“I hope (Velarde) doesn't make as many mistakes as he did last year,” Arista said.
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