BUENOS AIRES: Argentina cut its benchmark interest rate for a sixth time under President Javier Milei as his government sees inflation edging lower while it shrinks the central bank’s balance sheet.
The monetary authority lowered its key rate to 40% from 50%, according to a statement published on its website on Tuesday. Borrowing costs have now fallen from a high of 133% last December.
Argentina’s monthly inflation has slowed since Milei took office Dec 10, easing to 8.8% in April from 26% in December.
His economic team sees the trend continuing as it forecasts consumer price gains falling to 3.8% by September, according to a presentation seen by Bloomberg News.
That’s much lower than the 5.8% rate expected by analysts in a central bank survey. However, annual inflation continued to run hot at 289.4% in April.
In addition to lowering its key rate, the central bank also said in a separate press release on Tuesday night that it would intervene at its discretion in the secondary bond market without considering the price spread of 2% set by the current regulation.
On Monday, the International Monetary Fund signed off on the eighth review of Argentina’s US$44bil programme.
If approved by the IMF’s executive board, that move would give the country some US$800mil in breathing room to honour debt repayments to the Washington-based lender. — Bloomberg
