Argentina Central Bank Raises Rate to 49% As Inflation Jumps

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Argentina’s central bank raised interest rates for the fifth time this year on Thursday in an attempt to halt an inflationary spike.

BCRA, as the Argentine monetary authority is known, increased its benchmark Leliq rate by 200 basis points to 49%, according to a statement. The rate hike also boosts the effective annual rate to 62%, up from slightly above 55% previously.

The rate increase comes after Argentina’s statistics agency earlier on Thursday released data showing consumer prices rose 6% in April, bringing it to the highest annual level since 1992.

Read More: Argentina Inflation Surpasses Forecasts, Driven by Clothing

The central bank said in the statement that it “expects that inflation in the following months continues decelerating gradually” from its peak in March. “International financial conditions and the recent behavior of commodity markets suggest a certain stability in commodity prices may have been reached,” it added.

Russia’s invasion of Ukraine, which propelled energy and food prices around the world, has given Argentina’s already high inflation another boost. A faster rate of controlled devaluations on the peso and import restrictions have also pushed prices higher, while a plan to unwind subsidies on electricity bills this year stands to keep inflation elevated too.

Argentina is also raising rates to comply with its $44 billion agreement with the International Monetary Fund, which calls for the government to keep borrowing costs, measured by the effective annual rate, above inflation.

(Updates with official statement from central bank in second paragraph)