'Annual 100%' Inflation and Peso Collapse... Argentina Raises Benchmark Interest Rate to 91%

Argentina, suffering from a murderous inflation rate exceeding 100% per year and a collapse in currency value, has unexpectedly raised its benchmark interest rate to 91%.

On the 27th (local time), the Central Bank of Argentina raised the benchmark interest rate by 10 percentage points from 81% to 91% per annum.

This comes just a week after a 3 percentage point increase last week, marking the largest hike in 20 years since 2002. As a result, Argentina's real effective interest rate rose from 119.4% to 141% per annum.

The Central Bank of Argentina's decision aims to curb soaring inflation and stabilize the peso's value, which has plummeted in the market. Following the surprise rate hike, the peso's value in the black market rose by 1.3%, trading at 463?468 pesos per dollar. However, compared to the official exchange rate of 222 pesos per dollar, the peso's value in the black market remains significantly lower.

Experts assess that even with a benchmark interest rate as high as 91%, it will be insufficient to suppress the murderous inflation and stabilize the foreign exchange market. Argentina's inflation rate for this year is projected to be at least 120%.

Juan Leandro Paolicki, an economist at Empiria, told the daily newspaper La Naci?n, "There is no solution without an economic stabilization program," adding, "There is no interest rate that can prevent panic in the foreign exchange market under the current circumstances. To achieve this, the fiscal deficit must be reduced."

The market is closely watching whether Argentine authorities can stabilize the economy through the Central Bank's strong rate hikes, yuan-denominated payments for imports of Chinese products, and renegotiations with the International Monetary Fund (IMF) to ease loan repayment conditions.

This content was produced with the assistance of AI translation services.