{"id":26447,"date":"2023-04-27T19:30:34","date_gmt":"2023-04-27T19:30:34","guid":{"rendered":"http:\/\/lynettelockhart.com\/client\/argentina-plans-huge-rate\/"},"modified":"2023-04-27T19:34:13","modified_gmt":"2023-04-27T19:34:13","slug":"argentina-seeks-to-tame","status":"publish","type":"post","link":"http:\/\/lynettelockhart.com\/client\/argentina-seeks-to-tame\/","title":{"rendered":"Argentina seeks to tame inflation, peso with biggest rate hike since 2019"},"content":{"rendered":"

By Jorge Otaola<\/p>\n

BUENOS AIRES (Reuters) -Argentina’s central bank hiked its benchmark interest rate a huge 10 percentage points to 91% on Thursday as it tries to tame high inflation and steady the peso currency, which has tumbled in black market trading over the last week.<\/p>\n

The hike, the biggest since a market meltdown in August 2019, comes after the central bank (BCRA) had already lifted the rate last week by 300 basis points to 81% in an effort to control inflation running at 104% annually.<\/p>\n

The central bank confirmed the hike in a statement after Reuters earlier reported the move, citing bank sources.<\/p>\n

News of the sharp hike lifted the peso currency in the black market, which strengthened 1.5% to 462\/467 per dollar on Thursday, although it was still over 100% off the official exchange rate of 222 per dollar.<\/p>\n

A higher interest rate offers more incentives to savers to keep their funds in pesos, strengthening the local currency, but weighs on borrowing and economic growth.<\/p>\n

In a statement the bank said it had raised the benchmark rate to shift toward “real returns on investments in local currency” and to promote savings in pesos. The 91% rate would apply to fixed-term 30-day deposits of up to 30 million pesos. <\/p>\n

“The BCRA will continue to monitor the evolution of prices, the dynamics of the financial and forex markets, and monetary aggregates in order to calibrate its rates policy,” it said.<\/p>\n

‘PROMISING, BUT LATE’<\/p>\n

Analysts cheered the move, though cautioned that it was only a bandage for Argentina’s many economic woes.<\/p>\n

The major global grains and beef supplier is battling inflation that topped 104% in March, with analysts predicting prices will rise this year by some 110% to 130%. The peso currency is also quickly losing value against the dollar.<\/p>\n

“The rate increase is a promising measure, but late,” said Sergio Chouza from the Sarandi consultancy.<\/p>\n

Analyst Leonardo Chialva said the move would be a “patch” that could bring calm to the markets for now but would not fix the root issues, especially with the government under pressure to spend ahead of general elections in October.<\/p>\n

“The underlying problem is the fiscal one, and the cure needed is difficult to pull off in an election year,” Chialva said.<\/p>\n

The South American country has a $44 billion loan program with the International Monetary Fund (IMF), which includes targets to have a positive real interest rate, rein in inflation and build up its scant foreign currency reserves.<\/p>\n

(Reporting by Jorge Otaola; Writing by Adam Jourdan; Editing by Jonathan Oatis and Rosalba O’Brien)<\/p>\n

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By Jorge Otaola BUENOS AIRES (Reuters) -Argentina’s central bank hiked its benchmark interest rate a huge 10 percentage points to 91% on Thursday as it tries to tame high inflation and steady the peso currency, which has tumbled in black market trading over the last week. The hike, the biggest since a market meltdown in […]<\/p>\n","protected":false},"author":8,"featured_media":26448,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":""},"categories":[1213],"tags":[1223],"class_list":["post-26447","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-u-s-business","tag-updated"],"jetpack_featured_media_url":"http:\/\/lynettelockhart.com\/client\/wp-content\/uploads\/Reuters_Direct_Media\/USOnlineReportBusinessNews\/tagreuters.com2023binary_LYNXMPEJ3Q0QS-VIEWIMAGE.jpg","_links":{"self":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts\/26447","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/comments?post=26447"}],"version-history":[{"count":5,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts\/26447\/revisions"}],"predecessor-version":[{"id":26764,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts\/26447\/revisions\/26764"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/media\/26448"}],"wp:attachment":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/media?parent=26447"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/categories?post=26447"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/tags?post=26447"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}