FILE PHOTO: The facade of Argentina’s Central Bank is pictured in the financial district of Buenos Aires, Argentina December 7, 2021. REUTERS/Agustin Marcarian
By Eliana Raszewski, Jorge Otaola and Walter Bianchi
BUENOS AIRES (Reuters) -Argentina’s central bank board will debate a possible interest rate adjustment at its weekly meeting on Thursday as the country battles 104% annual inflation, four sources close to the entity said, though no decision has yet been made.
The board, which did not include a rate discussion on the agenda last week, will discuss a possible hike to the benchmark Leliq rate currently at 78%, after March inflation came in at 7.7% last Friday, the highest level in over two decades.
“It will be decided at the directors’ meeting today,” said one source at the bank with direct knowledge, who asked not to be named as the discussions were private and ongoing.
“No decision has yet been made.”
A second source, a central bank adviser, said that an interest rate adjustment would be debated and could be hiked.
The South American country is battling a weakening peso currency that has hit record lows against the dollar in popular parallel markets, where it’s worth around half the official exchange rate. Central bank reserves are also worryingly low.
A third source with indirect knowledge said a rate decision would be included on the agenda. A fourth source at the bank said it was “likely” to be included, but did not confirm.
The central bank did not respond to a request for official comment.
Argentina’s board of directors meets weekly on Thursdays, though does not always include a potential interest rate adjustment on the agenda.
Reuters reported earlier this month that board members had discussed the idea of another potential interest rate hike to help rein in one of the world’s highest inflation rates that is driving up poverty and hammering the Peronist government.
Analysts predict a 200-basis-point raise to 80%.