Argentina now has one of the highest policy rates in the world, after the country’s central bank increased its benchmark interest rate by 300 basis points on Thursday, to 81%, according to the figures on the regulator’s website.
The country’s monetary authority made the bold step after inflation soared past expectations in March, exceeding 104% year-on year. The jump means the price of many consumer goods has more than doubled since the same period a year ago.
Buenos Aires also posted a $1.1 billion trade deficit last month, the widest in nearly five years. Agricultural goods, which account for most of the country’s export basket, fell 34% from a year ago as the farming industry has been hit by an unprecedented drought. Some Argentine economists predict a 4% recession in the country.
Argentina’s national currency, the peso, has hit record lows against the US dollar in popular parallel markets, where it’s worth roughly half the official exchange rate, according to Reuters.
The South American country’s international reserves dropped this week to a record low for the year.
Globally, Argentina has among the highest inflation rates for several years in a row. Buenos Aires has long tried to contain inflation but divisions have marred the nation’s economic policy. Last summer, three economy ministers succeeded one another in the space of just four weeks as the economic crisis deepened.
In December, the International Monetary Fund (IMF) approved another $6 billion of bailout money. It was the latest payout for Argentina in a 30-month program that is expected to reach a total of $44 billion.
The highest benchmark interest rate in the world, at 150%, is in Zimbabwe.
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