Argentina central bank raised interest rates for the fifth time this year on Thursday this week in an attempt to halt an inflationary spiral.
Also known as BCRA, the Argentine monetary authority increased its benchmark Leliq rate by 200 basis points to 49%, according to a statement.
The hike also boosts the effective annual rate to 62%, up from slightly above 55%. The rate increase comes after Argentina’s statistics agency released data showing consumer prices rose 6% in April, bringing it to the highest annual level since 1992.
BCRA said that it expects inflation in the coming months to decline gradually from its peak in March 2022. But angry protests seen on the streets against rising prices and opposition to the president point to a worsening situation.
“International financial conditions and the recent behavior of commodity markets suggest a certain stability in commodity prices may have been reached,” said BCRA in a statement.
Argentina has also been affected by the Ukraine conflict
Russia’s invasion of Ukraine, which pushed up energy and food prices worldwide, has added inflationary pressure to Argentina’s already overheated economy.
Devaluation of the peso and import restrictions have also pushed prices higher, while a plan to unwind subsidies on electricity bills this year stands to keep inflation elevated.
Argentina is also raising rates to comply with its $44 billion agreement with the International Monetary Fund(IMF), which wants the state to keep its annual borrowing above inflation.