Argentina's central bank raised interest rates 300 basis points to 81 percent

Buenos Aires (Armfalcon.com) – Argentina’s central bank raised its benchmark interest rate a sharper-than-expected 300 basis points on Thursday (20/4/2023) after inflation soared past expectations in March to reach 104 percent on an annual basis, the local monetary authority said in a statement.

Reuters previously reported, citing official sources, that the council had decided to raise the reference rate to 81 percent from the previous level of 78 percent after March inflation data hit 7.7 percent, the highest monthly rate in two decades.

The gains extended a new round of tightening by Argentina’s central bank, which is battling soaring prices and dwindling foreign currency reserves, while the peso has hit record lows against the US dollar in the parallel market. The drought has damaged the country’s main cash crop exports, soybeans and maize.

The bank raised its benchmark interest rate 300 basis points in March, its first hike since September at the end of a vicious tightening cycle for most of 2022. The bank is looking to cut rates this year in hopes that inflation will subside.

However, inflation has picked up again, pushing the poverty rate closer to 40 percent and hurting President Alberto Fernandez’s Peronist government, which is trailing the conservative opposition in public opinion polls ahead of October’s election.

Reuters reported earlier this month that members of the central bank’s board were discussing another rate hike to rein in one of the world’s highest inflation rates. Analysts expected the gain to be 200 basis points.

The central bank opinion poll predicts inflation will end this year at 110 percent, while JP Morgan estimates it could reach 130 percent.

In a statement, the central bank said it would “continue to monitor the evolution of the general price level, dynamics exchange market and monetary aggregates for the purpose of calibrating interest rate policy.”

Also read: Argentine Peso hits record low on black market during tough economic times
Also read: Argentina’s annual inflation exceeds 100 percent, the first time since 1991
Also read: Argentina raises interest by 300 basis points when inflation reaches 100 percent

source: www.antaranews.com

Source link