Buenos Aires: Argentina’s central bank on Thursday (October 12) raised the country’s benchmark interest rate to 118% as inflation data were worse than expected and 10 days before voters vote to choose a new president amid a deepening economic crisis. increased from 133% to 133%.
The rise came just after September’s inflation figures were released, with inflation rates exceeding expectations at 12.7% for the month and 138% for the year, eroding wages and savings and pushing two out of five Argentines below the poverty line. This made the soaring prices even worse.
Argentina’s central bank has struggled to match benchmark interest rates with inflation expectations, with inflation expected to end the year at more than 180%, according to a survey of analysts conducted by the central bank later in the day.
Some commentators questioned whether the hike came too late given the worsening economic scenario.
“Rate hikes are now pointless. The expectations are gone and the rate hikes at this point won’t stop the flight from the peso to the dollar,” said a national private banking manager on condition of anonymity.
The impact of inflation was exacerbated by the government devaluing the peso by nearly 18% in mid-August, around the same time the central bank last raised interest rates from 97% to 118%.
The Argentine peso has since fallen sharply, topping the psychological barrier of 1,000 pesos to the dollar earlier this week as the country prepares to vote in a general election scheduled for Oct. 22.
Voters will choose who will replace outgoing left-wing President Alberto Fernández, but radical liberal Javier Millay is the frontrunner after coming in first place in the August primary. It is believed that
Mr. Milay, who is trying to close the central bank and dollarize the economy to curb inflation, recently argued that the peso does not even play the role of “excrement” and urged deposits to avoid renewing bank holdings in pesos. advised the person.
The central bank’s interest rate changes on Thursday followed a last-minute decision not to raise interest rates to 145% “in response to leaks” after Reuters reported a higher figure, citing people close to the central bank. Ta. – Reuters
