February 20, 2018 / 10:27 PM / a month ago

Argentina central bank cuts rate on short-term securities

BUENOS AIRES, Feb 20 (Reuters) - Argentina’s central bank cut interest rates on its short-term securities on Tuesday in its monthly auction, the second straight reduction since the government loosened its inflation targets in late December.

The monetary authority sold 411.011 billion pesos ($20.72 billion) in Lebac securities, compared with the 492.878 billion pesos’ worth of securities that matured. It cut the interest rate on the 28-day Lebac, the shortest-term security on offer, to 26.75 percent, down from 27.24 percent last month.

The central bank is targeting inflation of 15 percent this year, up from a prior target range of 8-12 percent but below economists’ expectations for 19.4 percent inflation.

The central bank no longer considers the short-term Lebac yield as its benchmark interest rate, turning instead to the seven-day interbank lending rate in 2017. It held that rate at 27.25 percent last week, after reducing it in each of its prior two decisions. ($1 = 19.8380 Argentine pesos) (Reporting by Luc Cohen; Editing by Matthew Lewis)

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