Argentina’s central bank on Thursday, August 29, 2018 raises its benchmark interest rate from 45% to 60%, the highest in the world, in a bid to control inflation running at more than 31% as the country’s currency plummeted 15.6% to a record low 39 pesos/1 USD.
The central bank makes a statement that it calls a special meeting of its monetary policy committee, which votes unanimously to hike its key interest rate “in response to the foreign exchange rate situation and the risk of greater inflation.”
The moves come a day after Mauricio Macri, president of Argentina, has requested the International Monetary Fund (IMF) to speed up the 50 billion dollar loan to strengthen monetary and fiscal policies in response to the meltdown of the peso, which has lost 52.2% of its value against the greenback so far this year.
Despite signing a 50 billion dollar standby financing deal with the IMF earlier this year, President Mauricio Macri is struggling to convince the markets that he can spur Argentina’s economic growth while he cuts fiscal deficits and combats inflation.
As for the IMF, it has been reported that the IMF is studying a request from Argentina to speed up disbursement of a 50 billion dollar loan program after a collapse in investor confidence in President Mauricio Macri’s government that results in currency crisis.