(Adds official confirmation)
By Jorge Otaola
BUENOS AIRES, March 16 (Reuters) - Argentina's central
bank board said it agreed to hike the country's benchmark
interest rate by 300 basis points to 78% on Thursday after
annual inflation hit 100% for the first time in over three
decades.
The decision, confirming earlier reporting by Reuters,
came after 12-month inflation reached 102.5% in February, the
first time it has hit triple figures since a period of
hyperinflation in 1991. Prices rose 6.6% in the month, ahead of
forecasts.
The sharp hike is the first since September, when the bank
raised the 28-day Leliq rate by 550 basis points to 75%, the
last in a vicious tightening cycle all through 2022. It had
wanted to cut rates this year on hopes inflation would cool.
However, inflation has accelerated again despite
government attempts to cap retail prices, pushed up in part by a
devastating drought that is hammering grains and meat supply.
Reuters reported on Wednesday that the bank had put the
possibility of a rate hike back on the table after hoping to
hold it steady, due to the stubbornly high inflation and fears
of contagion from the global banking crisis.
"The government understands the complexities of raising the
rate, but the fear lies in the flight of more pesos to the
dollar and that is why it won the vote to increase," said one of
the sources, a central bank adviser, asking not to be named.
"However, the decision was well discussed."
The global banking sector has faced jitters after Silicon
Valley Bank's sudden collapse in the United States last week and
with Swiss regulators throwing a liquidity lifeline to Credit
Suisse amid a crisis of confidence in the lender.
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Argentina: inflation spirals Argentina: inflation spirals (Interactive graphic) ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Jorge Otaola; Writing by Kylie Madry; Editing by
Anthony Esposito, Adam Jourdan and Richard Chang)
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