Bloomberg News

Humala Names Three Directors to Peru’s Central Bank Board

October 03, 2011

(Updates with analyst comments in eighth paragraph.)

Oct. 3 (Bloomberg) -- Peruvian President Ollanta Humala designated three new directors to the seven-member board of the central bank, in a move that eased concern his government would try to play a greater role in monetary policy.

The government named Luis Arias, former head of tax collection agency Sunat, and economics professors Jose Gallardo and Jaime Serida to serve five-year terms, according to a notice published today in state gazette El Peruano.

Humala, who took office July 28, also ratified the appointment of central bank President Julio Velarde for a second five-year term as the former army officer seeks to reassure investors he’ll defend policies that gave Peru the fastest growth and lowest inflation in Latin America in the last decade.

“There’s no indication there’ll be any change in the direction of the central bank,” Pedro Tuesta, a former Peruvian central bank analyst and current economist at 4Cast Inc. in Washington, said in a telephone interview. “While the names are recognized professionals, what strikes us is that none of them are monetary or banking specialists. The trend in the region is for directors to be experts in macro or financial economics.”

The sol weakened 0.1 percent to 2.7750 per U.S. dollar at 1:41 p.m. in New York.

The extra yield investors demand to own Peruvian government bonds instead of U.S. Treasuries rose 17 basis points, or 0.17 percentage point, to a two-year high of 297, according to JPMorgan Chase & Co.

University Professors

Arias, who ran Peru’s tax agency from 2000 to 2001, is an economics professor at the Lima-based Esan university and holds a Masters from the London School of Economics. Gallardo teaches at the Catholic University in Lima and has an economics doctorate from the University of California at Berkeley. Serida, who also teaches at Esan, has a doctorate in management information systems from the University of Minnesota.

“The fact that there doesn’t seem to be any political affiliation between them is positive,” said Carola Sandy, an economist at Credit Suisse AG in New York.

The new directors, who must be sworn in by the head of the judiciary before they can take up their posts, will replace Jose Chlimper, Carlos Raffo and Martha Rodriguez, who were appointed by the previous government. Congress is responsible for appointing the remaining three directors, who will replace Beatriz Boza, Alfonso Lopez and Abel Salinas.

Changing Tack

Since taking office, Humala, leader of Peruvian Nationalist Party and a one-time ally of Venezuelan president Hugo Chavez, has pledged to honor investors’ contracts and spur private investment. That has distanced him from vows during the presidential campaign to renegotiate free trade agreements with the U.S. and rewrite the constitution to boost the state’s control of the economy.

The country’s currency, bonds and stocks rallied after Humala signaled he’ll maintain existing economic policies and an inflation-targeting regime by keeping Velarde at the central bank and naming Miguel Castilla as finance minister.

Standard & Poor’s cited the appointments as a reason for raising Peru’s foreign debt rating to BBB, the second-lowest investment grade, from BBB- on Aug. 30.

Forming the new central bank’s board “is among the first tests of Humala’s market-friendly stance,” said Bank of America in an e-mailed report before the appointments were made public. “Over time, we think Humala will make further concessions to leftist groups in his coalition and undertake more interventionist policies than currently expected,” wrote economists Francisco Rodriguez and Oscar Munoz.

The central bank will probably keep its benchmark lending rate unchanged at 4.25 percent for a fifth straight month Oct. 6, according to 10 of 11 economists surveyed by Bloomberg. One economist predicts a quarter-point decline to 4 percent.

Faster than expected economic growth and quickening inflation suggest the bank should keep rates on hold, Tuesta said.

--Editors: Philip Sanders, Richard Jarvie

To contact the reporters on this story: John Quigley in Lima at; Alexander Emery in Lima at

To contact the editor responsible for this story: Joshua Goodman at

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