Argentina’s central bank raised its benchmark Leliq rate to 69.5%, representing the largest hike in almost three years and signalling a more aggressive stance against surging inflation.
According to a statement, officials raised the rate by 950 basis points, the eighth increase this year. It follows an outsized, 800-basis point hike just two weeks ago. Until now, central bank officials only raised rates about once every month.
Earlier, the central bank had told traders that it was offering its Leliq note at the same rate, according to people with direct knowledge of the matter who asked not to be named. It marks the largest increase since August 2019.
Argentina’s annual inflation, which will be released Thursday at 4 p.m. in Buenos Aires, is expected to have surged past 70% after renewed political turmoil fueled price spikes and a currency rout.
New Economy Minister Sergio Massa, the third since early July, is renewing the government’s battle against inflation with a more conventional approach. Along with raising rates, Massa also committed not to ask the central bank to print any more money to finance government spending this year, a chronic source of inflation over the past two years.
Thursday’s rate hike also marks a complete eclipse by the central bank since its president, Miguel Pesce, took over two and a half years ago. Pesce gradually cut the benchmark rate from 63% in December 2019 to as low as 36% before starting to tighten policy this year.
Raising rates closer to annual inflation levels is part of the government’s effort to encourage savers to stick with pesos. It’s also a key pillar of Argentina’s $44 billion agreement with the International Monetary Fund, which calls for so-called positive rates.