Argentina Raises Key Rate To 47% as Inflation Hits 20-Year High

(Bloomberg) — Argentina’s central bank raised interest rates for the fourth time this year after inflation data published earlier in the day showed prices increasing at the fastest monthly pace in 20 years.

Most Read from Bloomberg

The monetary authority increased its benchmark Leliq rate by 250 basis points to 47%, according to a statement distributed Wednesday evening. The rate hike also boosts the effective annual rate, which accounts for compounded interest, to 58.7%, putting it above current annual inflation of 55.1%.

Read More: Argentina Inflation Surged to 20-Year High In March (1)

Central bank officials raised rates after the statistics agency published data showing prices rose 6.7% in March, the fastest monthly pace since 2002.

The surge of international food and energy prices as a result of Russia’s invasion of Ukraine combined with local factors, such as a fuel price increase and an accelerated pace of devaluation for the official peso, led to the more robust inflation in March.

Argentina is also raising rates to comply with its $44 billion International Monetary Fund agreement, which calls for the government to keep interest rates, measured by the effective annual rate, above inflation.

Most Read from Bloomberg Businessweek

©2022 Bloomberg L.P.