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ECONOMY | 12-05-2022 20:19

Argentina's Central Bank raises key rate to 49% as inflation jumps

Central Bank to raise interest rates for the fifth time this year in a bid to keep up with rising inflation.

The Central Bank on Thursday raised interest rates for the fifth time this year in a bid to keep up with rising inflation, people familiar with the decision said.

The BCRA, as Argentina's monetary authority is known, raised its benchmark Leliq rate by 200 basis points to 49 percent, according to the sources, who asked not to be identified because the decision has not yet been announced. The hike also boosts the annual effective rate, which was slightly above 55 percent.

A Central Bank press officer did not immediately respond to a request for comment.

The rate hike comes after the INDEC national statistics bureau released data on Thursday showing consumer prices rose six percent in April, lifting inflation to its highest annual level since 1992.

Russia's invasion of Ukraine, which pushed up energy and food prices around the world, has added another boost to Argentina's already high inflation rate. A faster rate of controlled peso devaluations and import restrictions have also raised prices, while a plan to eliminate subsidies on electricity bills this year will also keep inflation high.

Argentina is also raising rates to comply with its US$44-billion debt agreement with the International Monetary Fund, which requires the government to keep borrowing costs, as measured by the effective annual rate, above inflation.

by Ignacio Olivera Doll, Bloomberg

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