Argentina's cenbank keeps rate steady on inflation concerns

Wednesday, October 19, 2016

Argentina's central bank BCRA kept its key rate unchanged at 26.75% again this week for the fourth consecutive time.

In a statement release the BCRA highlighted that inflation in August and September benefited from a ruling by the supreme court reverting hikes in some regulated prices, an effect that will disappear in October. Inflation expectations for 2017 are still three percentage points above the bank's target range of 17-19%.

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While inflation in September in the Buenos Aires metropolitan area reached 1.1%, analysts consulted by the BCRA in its monthly expectations survey REM forecast the consumer price index will climb 2.0% in October.

On the other hand, the BCRA points out that core inflation, which excludes regulated prices and food prices, "showed a clear downward trend during the third quarter of the year."

"Therefore, to consolidate the disinflation already seen this year and to progress in the process of converging of 2017 inflation expectations to the range announced by the BCRA, the bank decided to maintain the rate at 26.75%," it stated.