Gatekeepers News reports that the monetary authority increased its benchmark Leliq rate to 60%, the largest in three years.
This is coming as inflation reached above 64% amid a growing political crisis.
According to Argentina’s central bank, the effective annual rate accounts for compounded interest, which reached 79.8%.
Consumer prices have been rising faster after the resignation of Economy Minister Martin Guzman at the start of the month, blowing open a political crisis that has raised questions about the future of a $44 billion program with the International Monetary Fund (IMF).
The IMF deal calls for the key rate to exceed annual inflation and sets growth targets for international reserves, which have only dwindled in July as Argentines continue to withdraw dollars from their bank accounts.
The decision to increase rates was communicated to brokers through the local Siopel trading system on Thursday.
The country’s monetary authority also informed traders that it was raising the overnight passive 1-day repo rate to 55%, from the previous 46.50%, and the active 1-day repo rate to 75%, from 65%. As of July, passive repos set the floor for the central bank’s key rate.
Officials have also requested that Treasury notes should offer investors higher interest as a way to reduce central bank money printing, a key source of inflation that’s on pace to hit 90% by year-end.
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