Argentina's Central Bank raises key rate to 47%

Argentina’s Central Bank raised interest rates for the fourth time this year after inflation data published earlier in the day showed prices increasing at the fastest monthly pace in 20 years, Report informs via the Buenos Aires Times.

The monetary authority increased its benchmark Leliq rate by 250 basis points to 47 percent, according to a statement distributed Wednesday evening. The rate hike also boosts the effective annual rate, which accounts for compounded interest, to 58.7 percent, putting it above current annual inflation of 55.1 percent.

Central Bank officials raised rates after the INDEC national statistics bureau published data showing prices rose 6.7 percent in March, the fastest monthly pace since 2002.

The surge in international food and energy prices as a result of Russia’s invasion of Ukraine combined with local factors, such as a fuel price increase and an accelerated pace of devaluation for the official peso, led to the more robust inflation in March.

Argentina is also raising rates to comply with its $44.5-billion International Monetary Fund agreement, which calls for the government to keep interest rates, measured by the effective annual rate, above inflation.