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Argentina hikes interest rate to 81% after inflation overshoot -official source

FILE PHOTO: The facade of Argentina’s Central Bank is pictured in the financial district of Buenos Aires, Argentina December 7, 2021. REUTERS/Agustin Marcarian

By Eliana Raszewski, Jorge Otaola and Walter Bianchi

BUENOS AIRES (Reuters) -Argentina’s central bank board has decided to hike the benchmark interest rate 300 basis points to 81% after inflation overshot expectations in March to hit 104% on an annual basis, an official source told Reuters on Thursday.

Reuters reported earlier, citing four sources close to the bank, that the board was debating a hike after a data release last Friday showed March inflation had clocked in at 7.7%, the highest monthly level in over two decades.

The source said the hike to the benchmark Leliq rate would be applied from today. The central bank has yet to formally confirm the rise from its previous 78% level.

Argentina is battling a weakening peso currency that has hit record lows against the dollar in popular parallel markets, where it is worth around half the official exchange rate. Central bank reserves are also low.

Reuters reported earlier this month that board members had discussed the idea of another potential interest rate hike to help rein in one of the world’s highest inflation rates that is driving up poverty and hammering the Peronist government.



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