BUENOS AIRES – The Central Bank of Argentina will hike its interest rates to tackle inflation, the BCRA president, Federico Sturzenegger, said on Tuesday.
During his presentation of the July monetary policy report, Sturzenegger pointed out that the “elevated” inflation was due to the “easing” of monetary policy adopted at the end of 2016, so the central bank is set harden its monetary policy stance in 2017.
These statements came after it was reported that the Consumer Price Index (CPI) stood at 1.3 percent in June, which according to Sturzenegger, obliged the bank to strengthen its monetary policy so that the prices would increase no more than 1 percent in the last quarter of 2017.
The head of the Argentine central bank, however, was satisfied with recent inflation rates which have dropped from 36.6 percent year-on-year in January to 21.7 percent in June, a 15-percent decrease which indicated “a very important disinflation process.”
Therefore, the BCRA president was optimistic about the future evolution of prices as he noted that “we are missing 4.7 percentage points to reach, in December, the proposed inflation goal for 2017,” which set a maximum at 17 percent.
According to the goal adopted at the beginning of 2017, the Central Bank of Argentina would lower inflation rates to 12 percent in 2018 and 6.5 percent in 2019. However, analyst believed that with current dynamics, prices would rise by 17 percent year-on-year in June 2018, and by 14.9 percent for the entire year of 2018.