PANAMA CITY (Reuters) - An expected rise in Peruvian inflation in March will not derail a downward trend toward 2 percent by the end of the year, Peru's central bank governor said on Saturday.
Consumer prices in February fell 0.09 percent - putting annual inflation at 2.45 percent, within the central bank's target range of 1 percent to 3 percent.
"We do expect (inflation) to be slightly higher this month, there is still half of March to go," Julio Velarde told Reuters on the sidelines of Inter-American Development Bank meetings in Panama.
But he did not expect that to disrupt progress toward an annual inflation rate of 2 percent by the end of the year.
Peru's central bank held its benchmark interest rate steady this month at 4.25 percent for the 22nd straight month. Velarde said markets were pricing in an interest rate cut ahead, but he declined to endorse those expectations.
Peru's economy grew 6.3 percent in 2012 - one of the fastest paces in the region - as strong domestic demand and construction activity offset weaker exports.
Velarde said domestic demand remained strong, citing robust business and consumer confidence.
(Reporting by Krista Hughes and Luis Rojas; Editing by Peter Cooney)