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Argentina's central bank likely to raise interest rate this week, say traders

Economy Aug 09, 2022 04:40PM ET
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© Reuters. FILE PHOTO: People walk outside Argentina's Central Bank, in Buenos Aires, Argentina July 29, 2022. REUTERS/Cristina Sille

By Jorge Otaola

BUENOS AIRES (Reuters) - Argentina's central bank is likely to raise its benchmark interest rate by 600 basis points this week to tackle the country's high inflation, market participants told Reuters on Tuesday.

Analysts and local traders consulted by Reuters agreed that the bank could bring the nominal annual rate to 66% from the current rate of 60%.

The decision is aimed at fighting the country's persistent high inflation, which in July is likely to be 7.2%, a Reuters poll showed. The government will publish its July inflation figures on Thursday.

"There are expectations for a new important rate hike by the central bank this week, in an attempt to continue recovering a greater appetite for peso placements and at the same time reduce the search for hedging" in dollars, said economist Gustavo Ber.

A spokesperson for the central bank told Reuters that the bank's board of directors will meet on Thursday, while another official source with knowledge of the matter did not rule out a new rate hike, although he did not define the eventual magnitude.

In late July, the bank hiked the rate 800 basis points amid a cabinet reshuffle aiming to curb the economic crisis the country is facing.

The newly appointed economy "superminister," Sergio Massa, said his mandate is to stabilize the country's situation by lowering the fiscal deficit, strengthening the central bank's scarce reserves and reducing inflation. [nL1N2ZF2RC

Argentina's central bank likely to raise interest rate this week, say traders
 

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