Argentina interest rate seen up 200 bps as inflation boils over
Reuters
Published Jun 09, 2022 06:07AM ET
By Jorge Otaola
BUENOS AIRES (Reuters) - Argentina's benchmark interest rate is likely to be hiked another 200 basis points next week, analysts polled by Reuters estimated, as the central bank seeks to counter soaring and painful inflation that could top 70% this year.
The survey of seven analysts and traders indicated the bank would likely hike the rate to 51% from its current level of 49%, according to a median of the responses. The estimates ranged from no change to a steepest hike of 350 basis points.
Inflation in the South American country is running at 58% and forecast to hit 72.6% by the end of the year, according to the latest poll of analysts by Banco Central de la República Argentina (BCRA). The bank has hiked the interest rate five times already this year.
"I think they will adjust the rate again by some 200 basis points, under a gradual strategy due to the hit to economic activity and the dynamics of the growing debt in pesos," said Gustavo Ber, head of the consulting firm Estudio Ber.
"Yields will still be below inflation expectations, although on track to reduce that trend, in an effort to rebuild investors' appetite for local currency instruments."
The central bank board normally meets on Thursdays and the possible rate change is expected at next week's meeting.
Mauro Mazza, an analyst at Bull Market Broker, contended though that there were signs that consumer price rises were decelerating.
"This could lead (BCRA President Miguel) Pesce to slow down the rate of monetary adjustment," said Mazza, who forecast that the bank would hold the rate steady this month. "Technically speaking, we see no reason for a new hike."
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.