March 2, 2017 / 9:09 PM / 7 months ago

Argentine central bank cuts reserve requirements

BUENOS AIRES, March 2 (Reuters) - Argentina’s central bank lowered banks’ reserve requirements by two percentage points, it said in a statement on Thursday, partially reversing a four percentage point increase last year that was intended to help stem rampant inflation.

The move will reduce reserve requirements to 20 percent from 22 percent for checking and savings accounts and to 14 percent from 16 percent for fixed-term deposits, a central bank spokesman said.

The central bank first raised reserve requirements in May of last year, when monthly inflation clocked in at 4.2 percent. Inflation ended 2016 at around 40 percent, though it slowed in the second half of the year, and the government expects annual inflation to fall to 17 percent in 2017.

In its Thursday statement, the central bank said it hoped the reduction in reserve requirements would push banks to raise interest rates for long-term deposits, encouraging savings in the local peso currency in a country where many prefer to keep their money in dollars or out of the formal financial system. (Reporting by Luc Cohen; Editing by Phil Berlowitz)

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