Argentina Raises Key Rate to 78% for First Time Since September

(Bloomberg) — Argentina’s central bank raised its benchmark rate Thursday for the first time since September after annual inflation surged above 100% last month, according to a monetary policy statement.

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The central bank boosted its benchmark Leliq rate by 300 basis points to 78%. The monetary authority’s board considered the increase in response to accelerating inflation and after leaving the key rate unchanged for several months.

Read more: Argentina Surpasses 100% Inflation as Sharp Recession Looms (1)

Consumer prices rose 102.5% in February from a year earlier, one of the highest rates in the world and the fastest pace in Argentina since late 1991, when the economy was cooling down from 3,000% hyperinflation. Triple-digit inflation now is putting extra pressure on the economy, which is expected to fall into recession this year before presidential elections in October.

The government reached a staff-level agreement on March 13 with the International Monetary Fund on the fourth review of its $44 billion program. The IMF deal requires Argentina to maintain interest rates above inflation in real terms.

In its last monetary policy statement Feb. 16, the central bank had attributed faster inflation to seasonal issues and explained that interest rates were still positive in real terms.

(Updates with central bank statement.)

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