Soaring Prices... Argentina Raises Benchmark Interest Rate from 52% to 60%

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyunjung] Bloomberg reported that the Central Bank of Argentina raised its benchmark interest rate by 8 percentage points from 52% to 60% on the 28th (local time).

The monetary authority announced in a statement that the benchmark interest rate would be raised to 60%, resulting in an effective annual rate of 79.8% when compound interest is considered. This rate hike marks the seventh consecutive increase and is the largest since August 2019.

With the annual inflation rate expected to reach 70%, investors have been demanding a more stringent tightening monetary policy. Consumer prices rose even faster earlier this month following the resignation of Finance Minister Martin Guzman and growing doubts about the International Monetary Fund (IMF)'s $44 billion bailout program.

Despite continuous rate hikes amid the ongoing economic crisis, Argentina recorded an annual inflation rate of 64% in June. There are forecasts that a triple-digit inflation rate by the end of the year may be unavoidable.

Economist Jose Yache, who served as Deputy Minister of Economy under former President Carlos Menem, told Argentine media outlet El Cronista, "The inflation rate for July is expected to exceed 7%, and by August, it could already surpass 100% annually before the end of the year."