Argentina’s central bank hikes rate for first time in a year

Bloomberg

Argentina raised its benchmark interest rate for the first time in over a year as it faces calls from the International Monetary Fund (IMF) to tighten its monetary policy.
The central bank lifted the key Leliq rate to 40% from 38%, the level it had stood for over a year even with annual inflation running at around 50%. The bank’s unorthodox approach until now had contrasted with a wave of rate hikes by central banks across the globe, seeking to battle
accelerating inflation.
IMF officials urged Argentina in December to implement an “appropriate” monetary policy as part of talks for a new program to reschedule payments on about $40 billion owed to the lender. They specifically called for interest rates to exceed inflation.
“The rate hike is a step in the right direction, but too timid to matter,” said Adriana Dupita, an economist with Bloomberg Economics. “The central bank will need to raise the rate further if it intends to use monetary policy to tackle inflation — with or without a deal with the Fund.”
Bloomberg News reported last month that central bank authorities were considering a rate hike.
The bank, which isn’t independent from the executive branch, has printed money to finance government spending throughout the pandemic, raising concerns about future inflation. Economists surveyed by the monetary authority expect prices to rise 52% this year.