Argentina holds benchmark interest rate at 63%

Argentina holds benchmark interest rate at 63%

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The Argentine central bank said on Friday that it will keep the benchmark interest rate steady at 63% in December, to help protect the overstretched local peso.

In a monthly report, the bank attributed its decision to “the importance of supporting a real positive return for savers.”

Argentina had cut the benchmark interest rate by five percentage points to 63% at the end of October.

The elected Argentine President, Alberto Fernandez, said that the International Monetary Fund is willing to work with his country to control inflation.

Fernandez added: “We cannot take further austerity measures, because the situation is very complex,” Bloomberg News reported.

For her part, Kristalina Georgieva, Managing Director of the International Monetary Fund, said she is very eager to know more details about Fernandez’s plan.

Fernandez and Georgieva made a phone call discussing details of that cooperation.

And in mid-November, Bloomberg News said: “The Argentine president is preparing to entrust his country’s central bank with trying to boost the economy, which is suffering from a severe crisis by applying a low exchange rate.”

Fernandez, who will take office on December 10, has promised voters that he will revive the economy from its slowdown, and he now aims to make the central bank the cornerstone of this strategy, by exploiting the fact that the bank is not legally independent of the government.

A low-value currency, according to theory, would help bridge the current account deficit that many economists consider the main reason for the recurring series of Argentina’s financial turmoil.

Projections indicate that the deficit will reach 1.8% of GDP this year, after reaching more than 6% in the third quarter of 2018.

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