Argentina raises interest rates by 550 basis points to 75% after inflation overshoot

A man walks past Argentina’s central bank on July 4, 2022 in Buenos Aires. Argentina’s central bank on Thursday raised the country’s benchmark interest rate by 550 basis points to 75%, a day after inflation beat forecasts at nearly 80% on an annual basis.

Tomas Cuesta | Getty Images News | Getty Images

Argentina’s central bank on Thursday raised the country’s benchmark interest rate by 550 basis points to 75%, a day after inflation beat forecasts at nearly 80% on an annual basis.

The hike follows a 950 basis point increase in August in the benchmark 28-day Leliq rate, as the government tries to bring down spiraling prices that are hurting Argentines’ savings and wages and undermining popularity. of the Peronist government.

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

Reuters reported in early September, citing a source familiar with the talks, that Argentina’s central bank planned to raise the rate to 75% this month due to high levels of inflation.

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