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Argentina hikes rates as inflation speeds to fastest level this year

A central bank source said that inflation had risen significantly in the month, but added that high-frequency indicators suggested that price rises in November would return to the lower levels of months prior to October. Argentina is battling with a currency crisis amid low foreign exchange reserves and is trying to keep the peso stable with strict capital controls.

Reuters | Updated: 13-11-2020 04:01 IST | Created: 13-11-2020 04:01 IST
Argentina hikes rates as inflation speeds to fastest level this year

Argentina hiked interest rates on Thursday after monthly inflation accelerated to the highest level this year, a move aimed at bolstering peso savings and reining in prices amid a wider economic crisis. The central bank raised the benchmark Leliq rate to 38% from 36% previously after the country's statistics agency had revealed October inflation speeding up to 3.8% and rolling 12-month inflation had been clocked at 37.2% in the month.

The central bank also raised overnight and 7-day reverse repo rates. The consumer price rise, which comes as the country has eased slowly out of its pandemic lockdown, was at the top end of analyst expectations, who had forecast a 3.1% rise for the month, according to a poll conducted by Reuters.

The Economy Ministry said the increase had been driven by price rises of seasonal products, clothing, footwear, and food/beverages. The ministry pointed out annual inflation was set to be significantly lower than in 2019. A central bank source said that inflation had risen significantly in the month, but added that high-frequency indicators suggested that price rises in November would return to the lower levels of months prior to October.

Argentina is battling with a currency crisis amid low foreign exchange reserves and is trying to keep the peso stable with strict capital controls. The country is also headed for its third straight year of recession. The grains-producing nation emerged from a sovereign default in recent months after restructuring over $100 billion in foreign currency debt and now faces crunch talks with the International Monetary Fund to strike a new deal.

Also Read: Mainland China reports 47 new COVID-19 cases vs 42 a day earlier

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)


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