Argentina’s government is bolstering its economic defenses as it battles runaway inflation that hit 109% in April, fast draining central bank foreign currency reserves, a weakening peso and simmering market fears of a sharp-shock devaluation.
The economy ministry announced a package of measures on Sunday including new interest rate hikes, more central bank intervention in currency markets and fast-tracked deals with creditors after inflation overshot all forecasts last week.
An official source told Reuters the rate hike would be 600 basis points, bringing the rate up to 97%. That would follow back-to-back hikes totaling 1,300 basis points in April.
Investment bank J.P. Morgan said an “onslaught of inflation” had forced the government to take “emergency measures”.
“The Casa Rosada (presidential palace) is concentrating for now on seeking resources to contain the bleeding of reserves and alleviate the impact of the rise in prices,” it said.