Argentine Central Bank Holds Key Interest Rate at 40 Percent

(Bloomberg) -- Argentina’s central bank held its key interest rate at 40 percent, the world’s highest, as it seeks to prevent a further slide in the peso and runaway inflation.

The 7-day repo was held at 40 percent, the central bank said on its website. All 21 economists in Bloomberg News’ survey called for the bank to hold borrowing costs.

Central bank President Federico Sturzenegger has raised rates more than 13 percentage points in the past two weeks to restore confidence in Argentine markets after a peso selloff spooked foreign investors and spread to equity and credit markets. Policy makers have said they will act again if necessary to support the currency. Inflation has failed to slow this year and remains near 25 percent, above the bank’s target of 15 percent.

The peso had its worst weekly drop in about a year and fell to a record on Tuesday. The Merval index has dropped 22 percent from a record in January and the yields on benchmark bonds rose to the highest since December 2016 last week.

To contact the reporters on this story: Andres R. Martinez in Buenos Aires at amartinez28@bloomberg.net, Jonathan Gilbert in Buenos Aires at jgilbert63@bloomberg.net.

To contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net, Robert Jameson, Andres R. Martinez

©2018 Bloomberg L.P.