(Bloomberg) -- Peru cut interest rates for a fourth straight meeting to a 14-month low with inflation now in retreat, allowing policymakers to focus on reviving an economy stuck in recession.   

The bank lowered its policy rate to 6.75% from 7% on Thursday, as expected by 10 of 13 analysts surveyed by Bloomberg. Three had forecast a bigger cut, to 6.50%. 

“We forecast that annual inflation will reach the target band within the coming months, and that annual inflation excluding food and energy will hit the target band at the end of 2023,” the bank said in a statement.  

Peru is undergoing its second-longest contraction in output in more than two decades, as political instability and bad weather take a toll on an economy that used to be Latin America’s star performer. Brazil and Chile have also eased policy in recent months, while the US Federal Reserve this week signaled that it is ready to start cutting interest rates early next year.

Mexico left its key rate unchanged at 11.25% on Thursday, while Colombia has also yet to initiate easing. 

Read more: Peru Struggles to Revive Its Days as Latin America’s Top Economy

Annual inflation in Peru slowed to 3.64% last month, close to the target range of 1% to 3%. Central bank chief Julio Velarde forecasts that it will be back at those levels early next year. 

The bank is monitoring to see whether rainfall expected to be triggered by El Nino could lead to a temporary spike in food prices. 

Analysts are bracing for a sixth straight contraction when the statistics agency reports economic activity data Friday. Finance Minister Alex Contreras said in recent weeks that the economy will start to recover early next year. 

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