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Consumer prices in Lima fell more than expected in June, which should allow the Central Reserve Bank of Peru to continue to cut its reference interest rate, reported Dow Jones Newswires.

The consumer price index for Lima fell 0.34% in June from the previous month, the government's statistics agency said Wednesday. On a 12-month basis, the CPI rose 3.06% through June, it added.

Economists expect the CPI to soon fall to within the central bank's annual target range of between 1.0% and 3.0%, allowing it to ease monetary policy with the aim of boosting economic growth.

"The significant moderation of inflation pressures, converging inflation expectations, well-anchored currency and gradual deceleration of domestic demand generate a rather constructive outlook for inflation going forward and this should prompt the central bank to continue to ease monetary policy," Goldman Sach's Alberto Ramos said.

The central bank's reference rate reached a recent high of 6.5% late last year, as increases in the costs of imported fuel and food products lifted consumer prices.

Since then, the reference rate has fallen to 3.0%, and another reduction is expected when the central bank's board of directors hold its regularly scheduled monthly meeting on July 9.

"We expect the central bank to ease monetary policy further next week; we forecast a 50-basis-point rate cut to 2.5%, but do not rule out a larger rate cut. We expect the current easing cycle to end with the policy rate at around 2.0%," Ramos said.

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