( Spanish) — Inflation does not let up in Argentina, and the country’s Central Bank continues to raise the reference interest rate to try to prevent savers from fleeing to the dollar to protect the value of their savings. The latest decisions left Argentina with the second highest benchmark interest rate in the world.
This Monday, the Board of Directors of the Central Bank of the Argentine Republic (BCRA) decided to raise the monetary policy rate by 600 basis points, bringing the nominal annual interest rate of the 28-day Liquidity Letters (Leliq) to 97%. It is the second time in less than 20 days that the entity has made this decision, after raising the rate by 1,000 basis points on April 27 (up to 91%).
As explained by the BCRA in a statement, “the decision of the monetary authority is based on the objective of tending towards positive real returns on investments in local currency, and of acting immediately to prevent financial volatility from acting as a motor of the inflation expectations.
This latest increase came on the first business day after the inflation data for April was known, which marked a monthly variation of 8.4%, an accumulated 32% so far in 2023 and a year-on-year increase of 108.8 %, according to him indec.
It also occurs after several days of increase in the parallel price of the dollar, the so-called “blue” dollar, which also showed no signs of slowing down after the announcement by the Central Bank. The parallel dollar became 14 pesos more expensive between Monday and Tuesday, until closing at 488 pesos for sale, according to the different portals that reveal the price on the streets.
The highest rates in the world
Zimbabwe is by far the country in the world with the highest interest rate: 150%, according to various rankings, such as Trading Economics or Expansion. The National Central Bank cut its rate by 50 basis points on February 2, to align it with its downward inflation outlook.
According to that entity, the country’s inflation, which in July 2020 reached a record of 485.3% year-on-year, was 75.17% year-on-year in April.
Argentina, which is the country that follows it in the highest rate with 97%, is in an opposite process: inflation has been growing. In one year, it grew from 60.8% year-on-year to the current 108.8%, according to the country’s official statistics.
Third on the list is Venezuela, with a rate of 57.57% and monthly inflation of 3.8% in April, according to its Central Bank, which again published the price rise data, interrupted since last October. The monthly data is close to that published by the Venezuelan Finance Observatory, which placed month-to-month inflation at 2.5%, the accumulated rate for 2023 at 71.08% and the year-on-year rate at 471%.
In fourth place is Ghana, with an interest rate of 29.5%, which it raised at the end of March. Previously it was at 28%. Its inflation in April was 2.4% monthly and 41.2% year-on-year, according to the country’s official statistics.
The top 5 is closed by Sudan, a country currently going through an armed conflict, with an interest rate of 27.3% and inflation of 63.3% in February, according to data compiled by Trading Economics.
