(Bloomberg) -- Argentina’s central bank sharply raised its key rate Thursday for the sixth time this year in an effort to contain inflation as price gains continue accelerating above 100% before a presidential election.
The monetary authority raised its key rate 15 percentage points to 133%, according to a statement. The move came after September inflation data published Thursday showing prices rose 138.3% from a year ago, the fastest pace since the early 1990s when Argentina was exiting hyperinflation. It also comes after officials hiked rates 21 percentage points in August.
Economists said the rate hike won’t do much to cool inflation because it’s coupled with money printing to finance government spending and still falls below inflation in real terms.
“The government is trying to gain time and, unfortunately, this does not solve anything. The effect will be almost nil,” said Alejo Costa, chief Argentina strategist at Banco Btg Pactual in Buenos Aires.
“This is like breaking both legs and then wanting to put a Band-Aid on it,” said Gabriel Caamano, economist at Buenos Aires-based Consultora Ledesma.
Despite one of the world’s highest monetary policy rates, inflation continues to surge in the country largely lacking credit as the Oct. 22 election unnerves markets and population at large.
The monetary authority raised its key rate 15 percentage points to 133%, according to a statement. The move came after September inflation data published Thursday showing prices rose 138.3% from a year ago, the fastest pace since the early 1990s when Argentina was exiting hyperinflation. It also comes after officials hiked rates 21 percentage points in August.
Economists said the rate hike won’t do much to cool inflation because it’s coupled with money printing to finance government spending and still falls below inflation in real terms.
“The government is trying to gain time and, unfortunately, this does not solve anything. The effect will be almost nil,” said Alejo Costa, chief Argentina strategist at Banco Btg Pactual in Buenos Aires.
“This is like breaking both legs and then wanting to put a Band-Aid on it,” said Gabriel Caamano, economist at Buenos Aires-based Consultora Ledesma.
Despite one of the world’s highest monetary policy rates, inflation continues to surge in the country largely lacking credit as the Oct. 22 election unnerves markets and population at large.
