Argentina hikes interest rates by 1,000 basis points

The Central Bank of Argentina (BCRA) increased interest rates by 1,000 basis points to curb high inflation and curb the depreciation of the currency. This was the second interest rate increase in 2 weeks. The interest rate thus rose to its highest level in 5 years. The bank raised the policy rate from 81 percent to 91 percent after the sell-off in the peso. This rate was the highest level since 2019. This step was the largest interest rate increase in the 3.5-year term of President Alberto Fernandez's government. In the country where annual inflation is above 100 percent and the currency is losing value sharply, the Central Bank increased interest rates for the second time in a few weeks. The bank had increased the policy rate by 300 basis points last week. The statement stated that the interest rate was increased so that investments in local currency would provide real returns and that "BCRA will continue to monitor the developments in prices and financial markets." Analysts predict that inflation, which exceeded 104 percent in March, could reach 130 percent this year. Argentina's Economy Minister Sergio Massa said earlier this week that the state would use all necessary tools to ensure stability and stop the currency's decline.