Economy

Argentina raises interest rate by 550 basis points after inflation exceeds

Argentina raises interest rate by 550 basis points after inflation exceeds

Written by Jorge Otaola

BUENOS AIRES (Reuters) – Argentina’s central bank raised the country’s benchmark interest rate by 550 basis points to 75 percent on Thursday, a day after it beat inflation expectations to close to 80 percent on an annual basis.

The increase followed a 950 basis point increase in August from the benchmark 28-day Leliq rate, as the government tries to cut surging prices that are hurting Argentina’s savings and salaries and denting the popularity of the Peronist government.

The positive real interest rate is also one of the points agreed between Argentina and the International Monetary Fund in a new loan deal worth $44 billion that the country needs to meet its upcoming debt repayment obligations.

Reuters reported at the beginning of September, citing a source familiar with the discussions, that the Argentine central bank was planning to raise the rate to 75% this month due to rising inflation levels.

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