Argentina’s central bank held its key lending rate unchanged at 40% on Tuesday, citing a need to keep rates high to contain inflation in the first decision since Luis Caputo took over as the head of the country’s monetary authority.
The benchmark rate — which started the year below 30% — was raised to 40% in May to try to stem a sharp slide of the peso. Weeks of turmoil on Argentina’s foreign exchange markets forced the country to seek a $50bn bailout from the IMF last month.
Looking ahead, the bank said it will maintain a “restrictive bias/stance” until inflation shows signs of falling in line with the government’s goal of 17% by December 2019. Argentina’s 12-month inflation currently stands at 26.3%.
The former finance minister Caputo replaced Federico Sturzenegger as the president of the central bank on June 14 after a rout of the peso saw it hit record lows.
The central bank recently announced a program to auction dollars as they come in from the IMF package, $100m at a time to the tune of $7.5bn, to try to contain the peso meltdown.