WASHINGTON: Argentina’s central bank on Tuesday left its benchmark policy interest rate unchanged for the fourth straight time at 26.25 percent despite data showing slower inflation in May, noting that expectations for inflation in 2017 and 2018 remained above its targets.
After three months of inflation above 2 percent driven by cuts to utility subsidies like electricity and home-heating natural gas, consumer prices rose 1.3 percent in May, below expectations and half the 2.6 percent increase in April. Twelve-month inflation fell to 24 percent. But in a central bank survey published earlier this month, economists’ expectations for inflation rose to 21.6 percent in 2017 and 15 percent in 2018, above the monetary authority’s target ranges of 12 to 17 percent and 8 to 12 percent for 2017 and 2018, respectively. Without further increases in utilities prices expected until later this year, economists expect inflation to cool in the coming months. “The estimates and state and private high-frequency indicators monitored by the central bank suggest that in June the economy continues the disinflation process that returned in May,” the central bank said in a statement. The bank’s board meets to set the policy rate twice per month.
