The Wall Street Journal

Argentina’s third central-bank hike in eight days puts key lending rate at 40%

Reuters
Argentine Treasury Minister Nicolas Dujovne and Central Bank of Argentina Chairman Federico Sturzenegger at a news conference in Washington during an IMF meeting in April.

Argentina’s central bank on Friday raised rates for the third time in eight days as it aims to stem the rapid depreciation of its currency amid high inflation, a move that led markets to rally.

The central bank said it raised its main interest rate by 6.75 percentage points, to 40%, following increases of 3 percentage points on Thursday and last Friday.

“In addition to using the interest rate, the [central bank] will continue to use all of its intervention tools in the exchange market,” the central bank said. “The monetary authority made these decisions with the objective to prevent disruptive behaviors in the foreign-exchange market as well as guarantee the process of disinflation, and it is ready to act again if necessary.”

The unexpected total increase of 12.75 percentage points to the policy rate since last Friday may be enough to stem the depreciation of the peso, Capital Economics said.