March 27, 2018 / 8:32 PM / a year ago

Argentina central bank holds policy rate at 27.25 percent

Argentina's President Mauricio Macri speaks alongside Argentina's Treasury Minister Nicolas Dujovne (R) and Argentina's Central Bank President Federico Sturzenegger at the G20 Meeting of Finance Ministers in Buenos Aires, Argentina, March 20, 2018. Argentine Presidency/Handout via REUTERS

BUENOS AIRES (Reuters) - Argentina’s central bank held its benchmark rate ARSMPR=BCRA at 27.25 percent on Tuesday, the monetary authority said in a statement, noting that high-frequency indicators suggested core inflation would remain high in March.

In explaining its fourth consecutive decision to hold the seven-day interbank lending rate steady, the central bank said the pace of hikes in regulated prices for utilities and transportation, crucial to President Mauricio Macri’s efforts to cut the fiscal deficit, would slow down after April.

“The acceleration of inflation in recent months is transitory and is due to large increases in regulated prices and the rapid depreciation of the peso between December and February,” the statement read.

The central bank said annual wage negotiations were resulting in salary increases consistent with the government’s 2018 inflation target of 15 percent, and that its recent interventions in the foreign exchange market meant the peso was not expected to devalue further in the coming months.

The bank has sold more than $1.7 billion in reserves since the beginning of March to prevent the peso ARS=RASL from further falling. Twelve-month inflation printed 25.4 percent in February, up from 25 percent the month before. The government is expected to publish March inflation data on April 14.

“Once the aforementioned transitory impacts conclude, inflation will descend toward the desired path,” the monetary authority said in a statement. “The central bank is prepared to act by adjusting its monetary policy rate if that does not occur.”

Reporting by Luc Cohen

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below