September 29, 2018 / 1:16 PM / 22 days ago

Argentina raises reserve requirements for banks to curb inflation

BUENOS AIRES, Sept 29 (Reuters) - Argentina’s central bank has raised reserve requirements for major banks by 3 percentage points as it seeks to tighten money supply under a revised International Monetary Fund (IMF) lending program with the aim of curbing runaway inflation, it said in a statement.

Central bank Governor Guido Sandleris, appointed on Tuesday after his predecessor unexpectedly resigned on the eve of the revised IMF deal, had met with bank executives on Thursday to discuss the increase, according to local media.

The statement, issued late on Friday, said banks could use cash or central bank debt to meet the reserve requirements.

The bank has raised reserves several times in recent months in an effort to cool prices in Latin America’s third-largest economy. The latest increase left reserve requirements for banks at 44 percent, according to Reuters calculations.

A spokesman for the central bank was not immediately able to confirm that figure, which was also reported by local media.

Sandleris announced on Wednesday that the central bank would target zero growth in the monetary base until June 2019 as part of the $57 billion IMF deal, dropping its policy of inflation targeting.

A slide in the peso this year, spurred by a tightening of Fed policy and an unexpected recession in Argentina, has wiped more than 54 percent off the value of the currency, driving prices sharply higher.

Inflation is expected to top 40 percent this year, according to the central bank. (Reporting by Nicolas Misculin Writing by Daniel Flynn; Editing by Tom Brown)

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