VINA DEL MAR, Chile: Peru's central bank may have room to cut its benchmark interest rate in the coming months as inflation retreats, Finance Minister Luis Miguel Castilla said on Friday.

The central bank has kept its base rate at 4.25 percent for 19 straight months. Although inflation was running above the annual 1-3 percent target range for most of this year, the 12-month rate cooled to 2.66 percent in November.

"What was impeding rates from going down was that inflation was above the range. Now that inflation has converged to within the target range it is more likely that there will be more flexibility in decisions it adopts," Castilla told Reuters at a meeting of the finance ministers of CELAC, or the Community of Latin American and Caribbean States.

He emphasized the central bank is autonomous and makes its own decisions.

Castilla forecast that Peru's economy will grow at least 6 percent in 2013, after expected growth of 6.3 percent in 2012, with domestic demand remaining robust and inflation near 2 percent in 2013, he said.

"Domestic demand has been and will continue to be in 2013 the engine of growth," he said. "In 2012 demand will grow above 8.5 percent for the full year, and (keep growing) by a similar amount in 2013."

Peru isn't planning to issue a sovereign bond in international markets next year but it could issue up to the equivalent of $500 million in Peruvian soles on the local market, Castilla said.

"At the start of the year we had a very successful (bond) issue," said Castilla. "Our financing needs have likely been reduced since we have a surplus and since we changed our debt profile by pushing forward amortizations."

Early this year, Peru sold $ 1.1 billion in global bonds after reopening debt maturing in 2031 and 2050, a deal that market sources said was seven times oversubscribed.